Could You Benefit From Credit Counseling?
At one point or another, many Americans will find themselves in a debt situation that they consider overwhelming or overly burdensome. When faced with too much debt, it can put a severe strain on finances, achieving goals, and even family relationships.
Luckily, there are tools to help ease the strain of too much debt; credit counseling is one of these tools. As with any financial decision, it’s essential to choose the option right for you and your unique situation. Below, we’ll take a closer look at what happens in credit counseling so you can make an informed decision on if it’s right for you.
Defining Credit Counseling
Credit counseling is a type of debt management assistance that is typically available for free through various non-profit or government organizations. The goal of a credit counseling service is to help you gain control of your credit card, student loan debt, or mortgage debt by helping you define and put into action a plan that works for your situation.
There are for-profit credit counseling agencies available, but it’s probably for the best that you stick to the non-profit organizations for assistance in this situation as incurring another bill probably isn’t the best thing for a financial situation that requires support. Using a non-profit counselor or counseling agency is also beneficial as it can give you a more unbiased opinion of your financial situation since they are not being paid.
How to Find a Credit Counselor or Agency
A quick Google search will lead you to an array of options, but how do you choose the right one? The National Foundation for Credit Counseling (NFCC) is an excellent place to start. The NFCC is the oldest and largest non-profit financial service and organization in the US. You can utilize the NFCC to both further your education on financial services and options available to you and schedule an appointment or locate an accredited and experienced financial counselor.
How Can I Prepare for My First Credit Counseling Meeting?
Once you’ve located your counselor or agency, and arranged your first meeting, expect the following information and documentation to be needed:
- All current debts and their amounts, including APR’s and other charges
- A detailed budget of all of your monthly expenses (all recurring bills and spending, including gas, groceries, and anything else you regularly spend on)
- Your income information
- Any other financial obligations you may have
Providing this information can feel a little uncomfortable, but it’s best to give your counselor a thorough and accurate picture of your entire financial situation so that they can help devise a useful plan to get you out of debt.
What Happens During a Credit Counseling Meeting?
Often, meetings will be conducted online or via telephone; however, if in-person is your preferred meeting method, you can usually locate a local counselor or agency with an office that takes appointments. During your meeting, your counselor will most likely pull a soft credit report so that they can get a comprehensive view of your credit standing and any collections or problems you may be dealing with.
After reviewing all financial information presented to them, you can expect to receive some useful advice on how to manage your current debt going forward. Some of the ways your counselor may suggest resolving your debt situation are:
- Debt settlement negotiations with your existing creditors
- Debt consolidation loans
- Credit card balance transfers
- Various other debt management programs
Your credit counselor will also probably suggest ways in which to improve your budget and finances in order to improve your situation; they may also refer you to some other resources that can offer additional help.