Free Consumer Credit Counseling Help

Consumer credit counseling can help you get a handle on your finances, learn how to reduce your monthly expenses and finally start paying off your debt. Reputable agencies often offer free consumer credit counseling. Credit counseling can be an extremely valuable tool for anyone, but especially for individuals with problem debt.

Where to Find Free Consumer Credit Counseling

Free consumer credit counseling is offered by a number of nonprofit agencies throughout the United States. These agencies work to promote financial responsibility by educating and advising individuals on how to manage their money. Consumer credit counseling agencies often provide free initial counseling appointments, and charge reasonable fees for other services like restructuring your debt. Others provide free services for setting up a debt management plan. A credit counseling organization, such as the National Foundation for Credit Counseling, called the NFCC, can refer you to a reputable agency that provides free credit counseling.

Credit Counseling Purpose

Credit counseling provides free or low cost assistance from a certified counselor trained in money management. Credit counseling helps you determine what your individual needs are, advise you on how to manage your own money, help you formulate a plan that addresses your present financial problems and how to avoid them in the future.

What to Expect

During your credit counseling session, a counselor will determine your monthly income, evaluate your monthly expenses and help you devise a monthly spending plan that you can live with. In addition to your monthly bills, other expenses like food and gas are taken into consideration. You can prepare for your appointment by making a list of the things you spend money on by scanning your check register and ATM receipts. Your counselor will also recommend ways for you to increase your income and decrease your expenses. If you are in extreme debt, the counselor may recommend a debt management plan or refer you to other agencies that can be of assistance.

Selecting an Agency

It is vitally important to select a reputable agency. True credit agencies work with you no matter how far in debt you are. Even though some agencies say they are nonprofit, they have adopted a for profit model that brings in huge amounts of revenue to generate profit for their for-profit affiliate businesses. A consumer credit counseling agency should be affiliated with a national organization that requires strict ethical and financial standards of the members. The agency also should be accredited by a third party accrediting body, such as the Council on Accreditation. Additionally, a consumer credit agency should be a 501(c)(3) nonprofit community organization, the board of directors should represent a cross section of the community and be made up of members not paid by the agency.

The agencies fee structure should be disclosed and clearly explained. The NFCC warns consumers to beware of agencies that say their fees are voluntary. Monthly fees should be in the range of $25 and not exceed $50. Finally, the counselors should be certified consumer credit counselors. NFCC certification means that counselors have passed several examinations measuring their financial knowledge.

If you go on a debt management plan, the agency should disclose what happens to your first payment. Some keep the first payment and don't pay your creditors. The full payment amount should go to your creditors, with none being held back by the agency. Ask to see evidence that the agency is bonded and insured to protect your payments.

Contact the Better Business Bureau and the State Attorney General before you make your decision. Consider unresolved complaints against the agency a warning sign. Anyone can make a complaint, but it is how the agency worked to resolve the complaint that is important.

Counseling and Your Credit Score

Most people who seek the help of a consumer credit counseling service are already in financial trouble and their credit scores have already been impacted. According to FICO, credit counseling should not negatively impact your credit score. The actions you take based on the counseling may, however, bring your credit score down. If you agree to settle for less than the full amounts you owe on credit cards or make partial or late payments your credit score may be impacted.