Credit Counseling Tips

Credit Counseling Road Sign

Debt is something that everybody has faced or will face at some point, yet many people don’t know how to get out of it and maintain their credit report. In mild cases, you can simply make the payments and eventually pay off your debt. In extreme cases, people are forced to give up their homes and file for bankruptcy.

But there is light at the end of the tunnel. Depending on how severe your debt is, consumer credit counseling may be an option for you. Legitimate companies that perform this service provide users with honest guidance and advice on paying off their debt as well as help in negotiating lower interest rates and monthly payments between you and your creditors.

On this site you’ll find up-to-date and honest information on everything from just what credit counseling is to how to find a reputable credit counseling agency.

What are Credit Counseling Services?

Credit counseling, in a nutshell, is to educate consumers on how they can avoid incurring debts that can’t be repaid.

Usually this is performed by a non-profit or credit counseling agency. If a person is behind on credit card payments and doesn’t have enough money to pay their debt, a credit counseling agency can act as a mediator between the person and their credit card company to try and negotiate lower monthly payments or lower interest rates.

The negotiation is often known as a debt management plan and, if negotiated properly, will almost always lead to lower payments and lowered interest rates for the customer in debt.

Consumer Credit Counseling and Who It Is For

People who are able to pay their bills and are current on all of their accounts but are unhappy with their interest rates can also use credit counseling, though it is generally not necessary or advised. Often a person in good standing with their credit card company can negotiate lower interest rates with creditors on their own or threaten to move their account elsewhere in order to get fair rates.

Credit counseling is best for people who:

  • Can’t pay the minimum on their credit cards
  • Are behind on payments or are consistently late on paying one or more of their regular bills
  • Are being hounded by collection agencies and creditors for unpaid debts
  • Prior efforts to negotiate repayment plans with your credit company has failed
  • Who Are Credit Counselors and What is Their Role?

Counselors at legitimate counseling agencies are Certified Consumer Credit Counselors who must meet high quality standards and pass a third party counselor certification exam.

Counselors give this advice either in-person, online, over the phone or through mail, after first being contacted by a consumer.

Customers are asked to provide financial documents, including bank statements and credit card bills, during counseling sessions. The counselor then reviews the information and provides advice on your specific situation and how to improve it. This often includes developing a spending plan that covers your living expenses and payments to creditors.

If a counselor determines that payment plans need to be renegotiated with your creditors, he or she will handle and oversee the negotiations to, hopefully, get you a lower monthly payment or interest rate.

Credit counselors cannot, however, give legal advice on your situation. Customers seeking that must refer to an attorney.