Credit counseling is a basic and introductory service that can lead you to other financial services if necessary. Typically during a credit counseling your advisor and you assess your financial situation from a critical and objective point of view to help you achieve the financial goal you have in your sights. The most important part is that your advisor will make personalized recommendations to help you and guide you towards your goal and that in some situations these recommendations include utulizar other services or more specialized help.
2. There is a difference between a credit counseling and a debt management program
A debt management program is a systematic repayment plan to pay your debts in full. It is usually a program that offers many benefits because it lowers interest and reduces your monthly payments, which means that you save time and money by repaying everything you owe. Unlike a consultancy, the program requires your cooperation and commitment in the long term and does carry a monthly cost. Generally, it is a recommendation that can arise in a credit counseling if your advisor considers it to be your best repayment option.
3. You must be prepared to take advantage of your session
Typically a counseling session lasts 1 hour. Much of that time can be invested in the process of informing your financial advisor about your current financial situation so that you can form a critical and objective opinion of the current situation. For example, your advisor needs to know details about all your monthly cats, your sources of income, your debts, your assets / liabilities and any other debt you have or information relevant to your financial situation. In addition, you would need to have with you documents such as the current account statements of your credit cards to have references on the interests and current balances of your accounts. If you arrive at your session with this information prepared, your advisor will have more time to focus on finding solutions and creating an effective action plan for you.
4. Not all agencies offer this service for FREE
Many companies appear to offer this service for free but they do not. Before scheduling your appointment, inquire and research a little about the services offered by the institution you have selected. If you have doubts, ask and do not have any pain in asking if the service has a cost and if the subsequent counseling also has it. You are in your right to be an informed consumer. Many agencies try to charge in advance and are usually not the most respectable or those that put your needs above their financial gain.
5. Work with a reliable credit counseling agency
Although many nonprofit agencies offer this type of counseling for free, this should not be the deciding factor in your decision to work with an agency. You must investigate the organization and know its policies to see if they are to your liking. Consult the National Foundation for Credit Counseling (NFCC) to obtain references from national agencies. You should also consult both the Better Business Bureau and the state attorney general's office or the local prosecutor's office to inquire if there are pending complaints against the agency you plan to work with.
As you can see, the benefits of a credit counseling are substantial. Also, you do not need to be in a bind to work with a credit counselor. A credit counselor can also help you organize your finances, plan better to save or educate you on how the financial system of the United States works, including how to read and analyze your credit report.
The good news is you already know that you are not alone and that you can find reliable and free help when you need it.