Credit Counseling: How It Works and When You Need It
Are you hoping to rebuild your credit score? Do you have debt that’s been building up over the years that has to be tackled? If either of those sound like you, a great way to…
Are you hoping to rebuild your credit score? Do you have debt that’s been building up over the years that has to be tackled? If either of those sound like you, a great way to get objective advice and access resources is through credit counseling. Taking that route will ensure your finances are back on track in no time.
There’s usually a wide range of classes, programs and services available from credit counseling organizations, usually involving topics such as:
- Bankruptcy
- Credit card debt
- Foreclosure prevention
- Mortgages
- Reverse mortgages
- Small business loans
- Student loans
How Does Credit Counseling Work?
Numerous programs exist out there, but it’s best to find a nonprofit organization whose staff includes financial experts with the appropriate credentials. Make sure their staff, aside from being credentialed in all the right ways, is able to specialize in debt management and debt payoff alike.
Be sure to check out the Financial Counseling Association of America (FCAA) and the National Federation for Credit Counseling (NFCC). Both have full directories of member locations that are accredited.
Credit counseling sessions usually last for just an hour; they can happen over the phone, online or in-person. Counselors generally take on their clients through one-on-one sessions. Typically, you will meet with a credit counselor or take classes led by the counselor’s staff, but they may recommend you to additional services, It includes classes on particular topics that are low-cost if not entirely free. Sometimes, counseling staff take the lead to that end also.
Be prepared to discuss your financial situation thoroughly with a credit counselor. Start with the big picture (your rent or mortgage payment and your car payment), and then move towards zeroing in on the nitty-gritty details (your credit card balances and how much you pay in interest each month). You’ll want to authorize a credit check for the counselor to be able to look over your credit report. However, if you already have an updated version in hand, just bring that with you to the session.
Whatever advice the credit counsellor gives you, don’t take any of it lightly. Keep in mind that these recommendations are meant solely to change your financial situation for the better. Part of all that may involve enrolment in a program for debt management. At that point, the credit counseling organization will take the initiative. On your behalf, they will start to negotiate a payment plan with your issuers.
What Makes A Credit Counseling Organization Reputable and Safe?
Thankfully, there are steps you can take to verify that you’re working with safe, reputable credit counseling organizations to start addressing your financial concerns:
- Accredited organization with certified staff
- Free information is accessible
- Initial consultation is free
- Manageable fees, if any
- Wide range of services
Conclusion
When someone is struggling to repay debts, a credit counselor can help them understand financial options. The consultation will go a long way in getting finances back on track no matter how dire things are. It can help to establish a budget so that payments are made in a timely yet manageable manner.
Related desks: Credit consulting