What is Credit Counseling and How Can it Help Me?

If you are in credit card debt, credit counseling may be the solution for you. The role of a credit counselor is to show you the best ways to handle your debt and design a payment plan to pay down that debt.

Credit counseling is a huge benefit if you are drowning in credit card debt. Credit counselors recommend a workable budget based on your situation and help you understand your finances and debts, and they may have money management training available as well. Counselors can work with credit card companies to negotiate down your debt, especially if you are deemed to be a hardship situation (To find out how much your credit card debt is disrupting your life, check out this debt analyzer tool.)

HOW CAN CREDIT COUNSELING HELP ME?

Here are some examples of how credit counseling companies can help you manage your debt:

• Assist you with reaching an agreement with the credit card companies
• Work with you on creating a budget that helps you live within your means
• Develop a personalized plan to solve your debt problem and financial situation
• Help you understand your credit report and credit scores with the three credit reporting agencies
• Connect you with resources and educational material to teach you how to stay out of debt

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HOW DO I CHOOSE THE BEST CREDIT COUNSELING FOR MY NEEDS?

When shopping for a credit counseling company, make sure their counselors are certified and trained in consumer credit, debt management, and budgeting. Keep in mind a reputable credit counseling company will be open to sending you free information about its services without obligating you to give details about your financial situation. If the company doesn’t do this, see it as a warning signal and seek help elsewhere.

FIVE QUESTIONS YOU SHOULD ASK BEFORE SIGNING WITH A CREDIT COUNSELING COMPANY

Ask these questions when considering credit counseling to help you find the best counselor for you and your specific situation:

1. WHICH SERVICES DOES YOUR COMPANY OFFER?

Look for a company that has more than one service including budget advising, managing debt and revising spending habits. Stay away from those credit counseling companies that pressure you to commit to a solution before they have analyzed your financial situation.

2. HOW WILL I GET MY CREDIT COUNSELING?

Credit counseling companies differ in how they offer their services. Will you meet in-person, online, or by phone? Depending on your schedule and preference, choose the company that will accommodate your needs. Your first counseling session should take about an hour with possible follow-up sessions.

3. WHAT FEES AM I REQUIRED TO PAY?

Ask upfront which fees you are required to pay. Do they have set-up or monthly fees? Most credit counseling companies are not-for-profit; however, credit counselors may charge fees for their services, which they deduct from your payments to them.

4. WILL YOU HAVE ME SIGN A CONTRACT OR PROVIDE ME WITH A WRITTEN AGREEMENT?

Before you sign an agreement or contract, please read it. Get any quotes on fees in writing before you begin your counseling. Don’t sign anything that you don’t understand.

5. DO YOU OFFER FREE EDUCATIONAL MATERIALS?

Avoid any credit counseling company that charges for educational information.

For more tips on credit counseling, read Should You Seek Help from a Credit Counseling Agency?

At DebtMD, we are committed to helping you achieve your dreams of financial freedom. DebtMD partners with the best credit counseling companies to fit your needs. Each company must meet certain standards and criteria. If you are ready to get a handle on your credit card debt, connect with a counselor and be on your way to debt-free living.

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