Credit counseling agencies offer a variety of services, from debt management plans to budgeting sessions. Many of them are nonprofit organizations that are members of the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA), which have accreditation and certification requirements to ensure a high standard of education and training among counselors. Others are for-profit companies that charge fees for their services. The Latest Info Found Here
How Credit Counselling Services Can Help You Rebuild Financial Stability
The most common service is debt management, which involves a counseling agency creating a plan to help consumers pay off their unsecured debt, usually credit cards, in a matter of three to five years. The goal is to lower interest rates and monthly payments by combining them into one consolidated bill, which the consumer agrees to pay each month. The counseling agency will often negotiate with lenders to reduce or waive fees, such as late charges and over-the-limit charges. In return, the consumer typically closes their credit cards and makes monthly payments to the agency.
During a credit counseling session, which can be in person or over the phone, the counselor will review your income and expenses, including spending habits, to see how much you spend each month. They will then create a budget that keeps your income ahead of your expenses and may include advice on money management and other basic finance topics.
Credit counseling isn’t a quick fix for overcoming large debt loads, and most people who enroll in a debt management plan will still end up with outstanding debt in the future. However, it can be an effective way to break the paycheck-to-paycheck cycle and to prepare for larger financial goals, such as buying a home.