Credit Counseling

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In this lesson you’ll learn about how nonprofit credit counseling can help you dig out of debt slowly and safely.

Description

Credit Counseling is a process, often offered by nonprofit organizations, where a credit counselor helps you to develop a budget and work with your lenders to pay off your debts. A credit counselor doesn’t focus on reducing the amount of money you owe, but they can help you to develop a payment plan and work with your lenders to reduce your interest rates and monthly payments to something that is manageable for you. They may also accept payments from you and distribute your payments to your loan and credit card companies. Credit counseling is appropriate for anyone, but may be especially beneficial to you if you feel like you don’t know what to do or you can’t do it alone. In some ways, credit counseling may seem similar to debt settlement or debt relief programs. It’s important to understand exactly what you’ll be getting yourself into before signing up for any program. This article from DebtWave lists nine questions you should ask before signing up for any program such as:

  • Is your organization accredited?
  • How much do I have to pay to use your service?
  • Will your program affect my credit?
  • Do you offer other services besides debt management programs?
  • How long will your program take to complete?
  • Who do I owe once I am in the program?
  • How does a debt management program differ from debt settlement?
  • Is a debt management program the same thing as credit counseling?
  • How often will I hear from you?