Millions of Americans face debts they struggle to pay down. But help is available in the form of credit counseling, and it can benefit just about anyone. So, here’s how credit counseling works.

The basics of credit counseling

Credit counseling services are nonprofit organizations that provide advice on managing your money and debts.

Credit counselors can help you establish a budget, create a debt-management plan, pay down your debts, and find education and workshops to help you gain skills and confidence.

Credit counselors are trained in consumer credit and money- and debt-management, so you know that you’re receiving good advice.

How credit counseling can benefit you

If you are facing financial difficulties because of credit card or other forms of debt, credit counseling is a must. Counselors can help you create a strategy to get out of debt and manage your money to avoid facing debt again.

This might include debt consolidation and a payment plan to help you pay down your debt, often at lower monthly payments.

But credit counselors do more than help people buried under mountains of debt. Because counselors offer advice on most credit concerns, they can assist you in working out how to stay on top of your finances even if you’re not in debt.

Some financial advisers even suggest getting in touch with a credit counselor as soon as you get your first credit card. This helps you understand how credit works and how to avoid living — and charging — beyond your means.

Now that you know how credit counseling works, it’s time to get started.

Getting started with a credit counselor

  1. Gather information on your finances, including your income, assets, debts, and monthly expenses. Include all your debts — store credit cards, car loans, student loans, mortgage, everything. You should obtain your (free!) annual credit report, available from the Annual Credit Report website.
  2. Find a credit counselor near you. Most organizations, no matter where they’re based, offer phone or internet counseling but might only be available for in-person consultations locally. A good place to start looking is the National Foundation for Credit Counseling (NFCC), which accredits institutions and provides consumer guidance for legitimate credit counseling services.
  3. Check with the Better Business Bureau or your state’s consumer protection services to ensure that the organization you’re considering is in good standing. Avoid any organizations that charge for providing you with information.
  4. Once you’ve found a reputable organization, get in touch with a credit counselor. The initial meeting should be free and will last between an hour and an hour and a half. Explain to your counselor what you need: debt management, help with loans, budgeting, and so on. Most importantly, listen to their advice. Remember that they’re there to help you.

Credit counselors won’t charge up front

No legitimate credit counselor will charge up front. While some services, like debt-management plans, may have fees attached, these shouldn’t be steep. If there is a fee, be aware that you might be eligible for a fee waiver if the burden would be too great.

According to the Consumer Financial Protection Bureau, you should avoid any organization that won’t help you because you can’t afford to pay.

The bottom line

Credit counseling is an excellent resource if you’re having a hard time with debt or budgeting.

For those considering bankruptcy, it’s a good idea to go to a credit counselor first. Bankruptcy can stay on your financial record for 10 years, and bankruptcy lawyers are expensive.

Anyone with a credit score, low or high, can get credit counseling. And most everyone could benefit.

Your path to financial freedom starts here.

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