Sep 18, 2024
Do you have too much high-interest debt? Credit counseling may help.
If you are struggling to pay off large amounts of debt or need to make a plan to reach your financial goals, you have options. A credit counseling service, for example, may provide you with guidance and services to help get your finances back on track.
This guide will explain the basics of credit counseling, including:
Credit counseling provides consumers with advice and guidance for managing their debts. Credit counseling agencies are usually nonprofit organizations that offer several different services to consumers.
A credit counselor can help you get a clear understanding of your situation if you find that your debt is overwhelming.
According to the Consumer Financial Protection Bureau, reputable credit counselors should be certified and trained in the areas of consumer credit, money and debt management, and budgeting.
Credit counseling can help consumers improve their finances. Some guidance credit counselors may provide include:
Most credit counseling agencies offer assistance over the phone or online. A credit counselor often starts with a one-hour session to gather general information and details about your finances, such as income, expenses, and debts.
A credit counselor may help you develop a budget and could recommend approaches to addressing your credit card debt. This may include a debt management plan tailored to your personal situation.
A credit counselor may also help with a plan to meet financial goals, such as buying a house or saving for retirement.
In addition to free services, nonprofit credit counselors also offer fee-based services, such as:
Important tips:
It’s important to determine the right approach for your financial situation. A credit counselor can help you choose the method that best suits your needs.
| Credit Counseling Services | How They Help |
|---|---|
| General budgeting | Free initial session to explore your income, expenses, and financial goals. Possibility of ongoing debt or credit counseling services (often for a fee). |
| Debt management plan | Counselor creates a plan to consolidate your consumer debtrs and lower the interest rate on your credit card debt, setting up a monthly payment plan to pay off the debt over three to five years. |
| Bankruptcy counseling | Two financial education sessions: one before you file, and one before your debts are discharged. |
| Student loan counseling | Discusson of repayment options, and a counselor may facilitate conversations with your loan issuers. |
| Housing counseling | Counselor helps you better understand and manage the cost of housing. |
Source: https://www.nerdwallet.com/article/finance/credit-counseling
Credit counseling isn’t just for people who have large amounts of debt. If you’re dealing with unexpected bills or expenses, working with a credit counselor might be able to help you figure out your next steps.
Credit counselors can also assist with other situations. You might want to seek credit counseling to:
A professional credit counselor can help you explore the available options for your specific financial situation.
If you decide that credit counseling may be right for you, start by contacting national nonprofit credit counseling services or agencies in your area. Such agencies should be willing to provide you with free information about services without requiring any information about your financial situation. Look for agencies that are members of National Foundation for Credit Counseling.
Ask questions before deciding on an agency. The Federal Trade Commission recommends asking the following:
Here are some other tips to keep in mind while searching for a credit counseling service:
Be sure that you understand the fees involved before committing to a debt management or other credit counseling service.
According to a recent NerdWallet survey, the average U.S. household carries roughly $ 173,000 in debt.1 It’s not surprising that many people feel overwhelmed and aren’t sure how to improve their financial health or where to start the process.
Consulting a debt counseling service to learn how they can help is one way to relieve the pressure.
A personal loan may also be an option for managing debt. Consolidating higher-interest debts into one fixed-rate loan may help you save money, pay off your balance faster, and give you a set date when you will be debt-free.
A fixed-rate personal loan comes with these benefits:
Want to learn more about how a debt consolidation loan from Discover could give you peace of mind and help you reach your financial goals?
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The information provided herein is for informational purposes only and is not intended to be construed as professional advice. Nothing contained in this article shall give rise to, or be construed to give rise to, any obligation or liability whatsoever on the part of Discover Bank or its affiliates.
