Credit counselling services aim to help consumers understand how they got into unmanageable debt and teach them how to avoid future problems. They also review different solutions for dealing with debt such as credit card balance transfers, debt settlement and bankruptcy.
If you’re considering credit counseling meaning, be sure to research the organization carefully. A reputable nonprofit agency should be accredited by the National Foundation for Credit Counseling and member of the Financial Counseling Association of America (FCAA). Your local consumer protection agency, your financial institution, or your friends and family are all potential sources of referrals. You should also check the agency’s fee schedule, customer reviews and Better Business Bureau rating before you make a decision to use its services.
Choosing the Best Credit Counselling Services for Your Needs
One of the most common types of credit counseling is a debt management plan (DMP). Through this process, a credit counselor will work with your lenders to consolidate your unsecured debt into one monthly payment that fits your budget and reduces your interest rate. The goal is to have you pay off all of your debt within three to five years and improve your credit score over time.
In addition to assisting with DMPs, credit counselors can help you develop a household budget and provide educational materials or access to seminars on personal finance topics. They can also scour your credit report for inaccuracies that may be hurting your score and suggest ways to improve it. They can also review your options if you’re behind on your mortgage or facing foreclosure.