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Credit Counseling: The Ultimate Guide To Getting Help With Your Credit
Credit is something everyone needs at some point or another. But, what happens when you get in over your head? If you feel like you’re drowning in bills, being harassed by debt collectors, or simply don’t understand where your money goes every month, you could benefit from seeing a credit counselor. These professionals are a debtor’s lifeline to regaining control of their finances and managing money better. Credit counselors can give clients tools they need to be financially successfully. However, credit and debt counseling is something that is highly underutilized and mostly because people don’t understand how it works or is afraid to admit they need help with their finances.
Below, we’ll cover everything you need to know about getting help with your credit, who you should trust, and who you shouldn’t. Some suggestions regarding well-rated, trusted debt and credit counselors, and warning signs you should never ignore. After reading all the information in its entirety, you’ll have the ultimate guide to getting help with your credit.
What is Credit Counseling or Debt Counseling?
Table of Contents
- What is Credit Counseling or Debt Counseling?
- National Averages/Statistics
- Most Common Reasons People Need Credit Counseling
- Consumer Credit Counseling Services
- American Consumer Credit Counseling
- National Foundation for Credit Counseling
- Cambridge Credit Counseling
- Clearpoint Credit Counseling
- Abacus Credit Counseling
- Why Consumers Need to Check Credit Counseling Agency Reviews
- What to Expect When Visiting a Credit Counseling Agency?
Are you confused about the difference between credit or debt counseling? Wait, is there a difference? That’s part of the confusion. The terms are often used interchangeable because they are, which means whether a business calls themselves debt counselors or credit counselors, they handle the same types of issues.
Credit counseling or debt counseling are synonymous terms and identifiers and almost always mean the same thing. Both methods of counseling are customized one-on-one sessions that are unique for each individual or couple struggling with debt and looking for a way to to get control of it. If needed, credit/debt counseling can be done by phone although it seems the most successful sessions are completed fact to face between a client and counselor. No matter how you handle the counseling sessions, all meetings are confidential. A credit counselors job is to educate consumers about how to repay debts and manage finances.
It’s important to realize a debt counselor is not the same thing as a debt settlement company. A debt settlement company is an agency that charges high fees to slash your debts with creditors. In recent years, many debt settlement companies have been involved in scams and debtors have been left in worse financial situations than when they started. Programs offered by debt settlement companies often put clients at more risk than simply having bad credit. Whereas a credit counseling agency helps to repair and deliver success.
Debt counselors will work with creditors to reduce interest rates, over limit fees, and set-up payment plans that a debtor can afford. They are completely different than a debt settlement company and go beyond budget concerns by providing lifestyle counseling and giving clients tools they need to avoid stressful financial situations in the future.
Many people don’t opt for the help of a credit counselor because they can’t conceive how they can afford to pay someone to help them reduce their debt when they are barely able to make ends meet as it is. However, once clients begin to work with a credit counseling agency, they will see that it is a very affordable service with minimal fees. In fact, many of the services offered by an accredited credit counseling agency are free or fees are mandated by law, which means clients do not have to worry about being taken advantage of or put in a worse financial situation with even great hardships.
Debt is something everyone has in common. Here are some national averages/statistics regarding debt.
- According to a 2010 survey by the NFCC Financial Literacy Survey 2 in 5 adults keep a budget; however, more than half still don’t
- The same survey above showed that 65% of adults (people over 18) had not ordered a credit report in the last year
- The 2010 survey also registered 153M bankruptcies an increase from 2009 and a 5-year high
- Of adults surveyed in the NFCC Sharpen Your Financial Focus Initiative Impact Evaluation (April 2016), 4 out of 5 admitted they could benefit from the advice of a debt counselor (study included 62,000 participants)
- The survey also unveiled that 28% of adults questioned regularly paid their bills late
- Mybanktracker.com estimated that less than 50% of Americans have less than one month of emergency savings
- The same 2010 study showed 28% of Americans have less than two weeks of expenses saved
Most Common Reasons People Need Credit Counseling
Just like behavioral or marital counseling, no one seeks advice from a credit counselor for the same reason. However, there are some general commonalities between people who have found themselves in a financial crisis. Some common reasons a person or couple visit a credit counselor include:
- Sudden Unemployment
- Marital Separation
- To stop debt collection actions and phone calls
- Reduce interest fees and stop monthly over the limit fees
- Pay off debt faster
- Filing Chapter 13 or Chapter 7 bankruptcy
Consumer Credit Counseling Services
Until someone needs credit and debt counseling, they may not be aware of the services around them. In most communities, credit counseling is available at credit unions, extension offices, religious organizations, and non-profits. Usually, credit counseling is low cost or free. Below, we have gathered information about the most popular and sound credit counseling agencies in the United States.
You can either get help choosing a consumer credit counseling service here, or continue reading our reviews below.
American Consumer Credit Counseling
The American Consumer Credit Counseling (ACCC) is a non-profit agency that has been in business for over 25 years. The BBB accredited, non-profit organization has many locations throughout Texas, Nevada, California, and Massachusetts. The company has been accredited with the BBB since June 2009. Because legislation regarding debt, bankruptcy, and other financial products is always changing, the ACCC is committed to staying atop of all changes and promises to comply with stand and federal laws that require their services be rendered for minimal fees. Services offered by American Consumer Credit Counseling include:
- Credit card, Bankruptcy, and Student Loan Counseling
- Debt Management
- Financial Education
Through their efforts, ACCC promises to help clients get reduced interest rates on owed debt, attempt to stop late and over the limit fees, consolidate any unsecured debt to achieve a lower monthly payment, and develop a workable budget that clients are comfortable working with. Due to their long history in the business, ACCC is often a business that consumers automatically trust to help with financial problems and issues. The agency’s reputation has also earned them mentions or features by the following publications and television shows; Forbes, FOX News, USA Today, US News, Boston Herald, Wall Street Journal.
Clients who worked with ACCC to reduce their debt and face the challenges debt had created have favorable reviews. In fact, most reviews about the company are overwhelmingly favorable. Some of the recurrent themes in customer reviews include the success of the company’s representatives in negotiating lates fees and interest rates, how the solutions offered truly helped pay off debt faster, and the excellent customer service provided during a client’s entire journey with the company. Current and former clients also praise the company’s newsletters and resources as helping them learn practices that created better financial discipline, which helps avoid a crisis in the future.
Any negative reviews regarding the agency were quickly addressed by supervisors, and appropriate steps were taken to alleviate customer concerns and rectify any mistakes made by either party. The company does caution that it is a client’s responsibility to notify ACCC if there are any changes or correspondence from creditors received. If ACCC does not have all the information about a client’s current situation, it is impossible for them to provide sound advice or solutions.
National Foundation for Credit Counseling
The National Foundation for Credit Counseling (NFCC) is the first and largest credit counseling agency in the United States. In fact, others in the industry often base their practices, solutions, and efforts on those developed by the professionals at the National Foundation for Credit Counseling. The agency and all of its employees are dedicated to helping people achieve financial wellness.
Throughout the United States and Puerto Rico, the National Foundation for Credit Counseling has 600 offices. Each of these offices is staffed with certified credit counselors who are financial advocates dedicated to helping empower millions of Americans to take charge of their finances.
When you visit a National Foundation for Credit Counseling office, you will get a one on one review of your financial situation. The credit counselors at this agency specialize in credit card debt, student loans, housing issues, money management, and much more.
Due to their success with helping people achieve financial wellness, the company has received accolades from many well-known institutions. NFCC has also been featured and given positive reviews from MSN Money, The Washington Post, The Wall Street Journal, USA Today, and CNN.
The NFCC is also responsible for setting voluntary standards that other credit counseling agencies follow. The agency offers accreditation to agencies that strictly follow their guidelines. In 2016, the agency had provided its accreditation to over 4,000 agencies across the United States.
Cambridge Credit Counseling
Cambridge Credit Counseling was established in 1996 and specializes in credit card debt relief. Since its origination, the company has counseled two million people regarding their financial situations and helped about 225,000 families and individuals with personalized debt repayment plans.
The non-profit agency meets 501(c)(3) requirements and employs only Nationally Certified Credit Counselors. It is run by an Independent Board of Directors consisting of professionals. The job of the board is to ensure the agency is meeting its full potential regarding client services.
Other services the agency offers include student loan repayment options, housing issues, and 1st-time homebuyer solutions. The agency provides financial education and uses proven financial solutions to help clients with debt situations.
The agency is non-profit, has an A+ BBB rating, and is consumer affairs accredited. Other situations the counselors at Cambridge Credit Counseling can help with include:
- Foreclosure intervention (in Connecticut and Massachusetts only)
- Reverse mortgages (in Massachusetts only)
According to ConsumerAffairs.com, Cambridge Credit Counseling is one of the top-rated debt counseling agencies in the United States. Additionally, the company is ISO 9001:2008 registered and is FCAA Code of Practice Compliant. The company can exceed client’s expectations by continually honoring and living up to their company motto of operating with integrity and honor.
Customers that have worked with Cambridge Credit Counseling have overall stellar reviews. Some of the services that stand out most have to do with the company’s representatives. Most felt that the customer service they received was informative and that team members were very understanding of difficult, personal situations, and were never condescending or judged client’s debts. Adding to the positive reviews, are the fact that in many situations, Cambridge was able to do things debtors had not been successful on doing themselves such as lowering interest rates with banks, combining unsecured credit in one low monthly payment, and putting an end to over the limit and late fees. With Cambridge Credit Counseling’s help, many debtors have been able to gain financial freedom and enjoy life with the burden of unwavering debt.
Clearpoint Credit Counseling
Clearpoint Credit Counseling is another national, non-profit, debt counseling agency. The organization has been accredited by the BBB with an A+ rating since June 1, 1990, and maintains NFCC membership, has HUD certification, and is accredited by the Council on Accreditation (COA). The agency helps Americans across the United States and also offers free resources on their website including self-help articles, a blog covering financial topics, videos, and other resources.
The agency has office locations all over the United States including:
- New York
- North Carolina
- Downtown D.C.
Clearpoint Credit Counseling offers many low-cost and free debt solutions services to clients including:
- Credit counseling
- Debt management programs
- Housing programs
- Bankruptcy counseling
- Student loan counseling
One of the most talked about features from Clearpoint Credit Counseling is their plain vanilla debt management program. What this means is that the services CCC offers are standard or very basic. In the financial industry, the term “plain vanilla” simply means basic or standard. What this means is that what you see is what you get, your debt repayment plan with Clearpoint will be simple to understand, clearly laid out, and have an expiration date (payoff date).
What’s unique about Clearpoint is they have specific offices that focus on helping the Hispanic and military communities with debt solutions. The company also publishes a blog with daily financial management tips, has eBooks available on their main website, and holds events and seminars to help people manage money in California, Georgia, and South Carolina. The company has achieved great success over the years and has been featured in major publications and television shows including the Wall Street Journal, NBC, FOX, CNN, USA Today, Consumer Reports, Kiplinger, and Univision.
Former and current clients have overall good reviews of the company. In fact, CCC has been accredited by the BBB since 1990, and during that 25+ year history, they have no recorded negative reviews. Instead, they have a plethora of positive reviews. One of the overwhelming themes in client’s positive reviews is how simple it was to get started and how the team at Clearpoint made sure client’s understood exactly where every penny of their monthly payment was going. With Clearpoint’s help, the majority of clients are successful, able to payoff their debt, especially credit card debt with high-interest rates and be successful in the future.
Abacus Credit Counseling
Abacus Credit Counseling offers many of the same services as the agencies mentioned above but specifically specializes in consumer bankruptcy counseling. Additionally, the agency offers debt advice and debt consolidation programs. The non-profit organization was founded by bankruptcy and financial professionals and offers the required courses for filing bankruptcy in all 50 states including Alaska and Hawaii.
The business has been accredited by the BBB for more than 20 years and has an A+ rating. The agency offers credit counseling along with their partner Sage Personal Finance. Debtors can opt to take the two required bankruptcy courses via telephone or online at a very affordable cost. In can you need help during the process, 24-hour live support is offered via their website.
The credit counseling and bankruptcy courses offered by Abacus are designed to help people analyze their spending habits, provide a review of all debts, and learn the basic of what it takes for good financial planning. The entire process is designed to help a debtor get a fresh start and be financially successful in the future.
The two required bankruptcy courses offered by Abacus are accepted in all 50 states. The company’s pre-filing course takes about 60 to 90 minutes to complete. The second course takes at least two hours to complete. (The time limit is established by law). After completing each course, debtors will be given the opportunity to print their certification certificate.
During its two-decade long history in the business, Abacus Credit Counseling Services has been the topic of thousands of positive reviews and testimonials. While the reviews can be as individual and unique as the customers the agency services, there are some easy to pick out themes. First, customer reviews are overall very satisfactory. One of the things mentioned most often was about the agency’s customer service.
Overall, customers felt that the team at Abacus was responsive, positive, and knowledgeable. While problems were few and far between when they did arise, Abacus was able to handle and rectify the situation quickly. One of the best parts about Abacus is its huge success rate. The purpose of the agency is to help customers find the path to financial success. Many “graduates” of the company’s debt management programs have successfully repaid their debts and continued to be financially responsible in the future.
Why Consumers Need to Check Credit Counseling Agency Reviews
You may have been given the name of a credit counseling agency by a friend or relative. While many word of mouth referrals are great, it’s important to do your research. It doesn’t mean that the company is great, but part of being more fiscally responsible is making good decisions. Checking the reputation of a credit or debt counseling agency you are considering working with is the most responsible decision you will make when starting this process.
First and foremost, it’s imperative that you check the type of agency you are thinking of working with. Unfortunately, there are scammers and shady companies out there looking for an opportunity to take advantage of people who may be down on their luck or confused about what to do in their situation. Most important, make sure that you are considering an accredited credit counseling agency, and not a debt management company.
We’ve talked about this in detail before, but it’s important to remember credit and debt counseling is very different than working with a debt management company. Debt management companies are not held to the same standards as counseling agencies, charge higher fees, and have a reputation of running scams or not delivering promised results or resources.
When you find reviews regarding the agency, you are considering make sure to weigh all the pros and cons. For instance, if a company has 92 positive reviews and one terrible review, you shouldn’t put much stock in that one negative review. As a general rule, you always want to throw out the best and the worst and work on the information in between.
After you’ve determined what reviews are legitimate, there are certain behaviors or statements that you want to look for. For example, pay special attention to any review regarding interactions with customer service. You want to choose a company that is available to help you when needed, answer questions quickly and honestly and provides you with accurate information. By reading reviews regarding customer service, you can get a good feeling for how you will be treated by an agency’s team when you make contact or call regarding problems or issues.
Another type of client review you want to take note of is the “where are they now” kind of reviews. These reviews are usually provided by people who have completed a program or followed proposed solutions from the company. In essence, you want to ask yourself where are these people who completed the program now.
Are they debt free? Were they able to complete the program? Did it work? Chances are the former client that wrote that review is just like you. If they can do it, you can do it too.
Lastly, we need to talk about the BBB. Essentially, you need to choose a credit and debt counseling agency that is accredited by the BBB and has a stellar rating, preferably A+. You are trusting the counselors at an agency with personal, intimate details regarding your life, identity, and future. With this in mind, you need to make sure you can truly trust the agency with this vital information.
But, it’s also important to remember that accreditation and a high rating aren’t the only things you should look at when you search for a company on the BBB’s website. The BBB offers an explanation of all factors on their website and it’s important for users to examine and understand all information.
Ultimately, you should choose an organization that is accredited, has a long history with the BBB, and has no complaints or government actions pending against them. If an agency has government actions pending against them or has had in the past, it’s a sign that you should choose a different organization. There are thousands of agencies in the US, and no one needs to work with an agency with a sketchy past.
If you notice that the company you were thinking of going with has one or two negative customer reviews, it’s important to explore the topic even more. The BBB allows users to anonymously search a business and read details regarding negative reviews. Some reviews are simply a result of misunderstandings or differences of opinion. If this is the case, a 3rd party mediator from the BBB will close the case against the business. If you choose a credit counseling agency that has any registered complaints in the BBB, it’s important to make sure it’s a closed and not active case. Additionally, read the review in entirely to determine how and why the case was closed. For example, did the original reviewer agree to close the case, or did the BBB close the case for another reason?
All of the information listed above may seem overwhelming at first, but nothing is as stressful as letting your debt get more out of control every day. Every day that passes and you do nothing to reign in your spending and overgrowing debt is another day that you could have been working towards financial freedom and a more stable future. However, it is up to you to take the steps needed to, and none of it should be done without diligent and proper research first.
After you’ve chosen an agency to work with and made your initial appointment, you’re probably quite anxious about what to expect. You may even be afraid that the person you work with will make fun of you or make you feel ashamed for your current situation. However, that is never the case.
Talking to a stranger about your financial situation may be uncomfortable at first, but once you realize that the counselor you are working with is only interested in helping you, it will become easier and more natural to talk with he or her about your situation and future. It’s worth noting that like many things in life, the anxiety you feel right before you go to a credit counselor is like many things in life – just a fear of the unknown. However, if you know exactly what to expect, you may feel a bit more comfortable at your initial appointment.
What to Expect When Visiting a Credit Counseling Agency?
Above, we’ve gone over how credit and debt counseling are one in the same. We’ve explained why people sought credit counseling and listed many of the top-rated agencies in the United States. However, this wouldn’t be the Ultimate Guide to Getting Help with Your Credit, if we didn’t explain what you should expect during your counseling sessions.
First, it’s important to leave any shame, fear, or other negative feelings at the door. The agency you are visiting truly wants to help you with your financial situation and cannot do this if you are not completely honest about your entire situation and how you ended up with the debt you have.
Even if you’ve mad, bad decisions, bought too many rounds at the bar, or simply have no idea where your money goes each month, you need, to be honest with the counselor. No matter what your situation is, the counselor can provide you with information and tools to help, but only if they know exactly what is going on. These professionals do not pass judgment but may be frank with you regarding what you need to do in the future. In addition to being open and honest, you will need to bring quite a bit of documentation with you as well including:
- Recent paystubs
- Credit card bills
- Loan statements
- Utility bills
- Household bills
- Estimated food and transportation budgets (bring receipts if possible)
The more complete and up to date the information is you provide and bring with you, the better the counselor will be able to provide sound, related advice, which will influence the plan and budget that is created for you.
It’s important to remember that if you’re unpaid bills or debts are at the point of wage garnishment, lawsuits, or other legal action, a credit counselor may not be able to address those accounts or further more extensive work may need to be done to fix these issues. For this reason, and many others, it’s absolutely vital that debtors start to think about debt counseling as soon as they start to recognize red warning flags going off, which can include garnering late fees, missing payments, late payments, etc.
After all, information has been discussed, usually in a one on 1 counseling session, the counselor will work with you on ways to manage bills, control debt/spending, and tools to avoid financial struggle in the future. One way this can be achieved is to create a custom repayment strategy. For those with significant debt issues, a counselor may recommend a debt management plan or program.
It’s important to remember that debt counselors are in business to provide clients with the best steps to control debt, manage their budget, mortgage, or determine if bankruptcy is a client’s only option. By taking advantage of this low-cost financial option, clients will be able to regain control of their finances, pay off debt faster, and in some cases retain assets that they once thought they’d lose.