Do you Need a Credit Counselor to Help Manage Your Finances?

Managing your finances can be a difficult task. But you can do it efficiently with some basic knowledge about handling money, budgeting skills, an understanding of your monetary requirements, and a strong will to avoid taking on debt. And a credit counselor might be just the right person to help.

Reaching a financially strong position is possible. If you know how to manage your money more effectively, you can earn more money and keep debt from controlling your daily life. 

If you want to achieve financial freedom and live without financial worry, but you don’t feel ready to face it all on your own, then you may want to consider help from a credit counselor. The credit counseling option is best for people who are having some financial issues and looking for some free financial advice or are struggling to become debt-free due to an unsecured debt burden.

Credit counseling companies, typically nonprofit organizations, offer services on multiple financial issues. They can help with bankruptcy, credit card debt, mortgages, foreclosure prevention, student loans, and small business loans, and more.

So, if you feel that getting professional help from a credit counseling agency or a reputed credit counselor may help you to live a debt-free life there are a few things to consider before choosing one.

How Does a Credit Counselor Help People?

Professional credit counselors are experts in managing money matters, credit card debt, bankruptcy, housing, and student loan issues. So, if you are having trouble with any financial matters like these, you may join a free credit counseling session provided by them. 

During a credit counseling session, they will talk to you and discuss your financial situation. This will help them to understand the problems you’re experiencing. The counselors will review your budget and analyze it to find opportunities to improve it. If you don’t have an existing budget, they may also help you create one. 

Expert credit counselors may help you to uncover  financial mistakes that are holding you back from saving more and managing your debt.. They will use their certified training and experience to find multiple ways to rectify your money-saving mistakes and recommend the best possible solution. By following their advice and learning to increase your saving habits, it will be easier for you to fulfill your financial goals and live a debt-free life.

Do You Need Credit Counseling?

If you’re considering working with a credit counselor to improve your financial condition, then you must understand both the pros and cons and how credit counseling may help you to reach a debt free life.

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1) The advice is free

The debt management plans offered by a credit counseling company might require a nominal upfront and fixed monthly fees. But, you have the option to attend workshops or get one-on-one financial advice from an expert credit counselor for free. So if you’re struggling with multiple financial issues and can’t figure out how to manage your money properly, it might be worth having a credit counselor review your situation.

2) Help you to manage your debts in a proper way

The credit counseling option will provide you with an effective debt management strategy to manage your debts with ease. They will also provide you expert advice on how to manage your finances better. With proper money management and a debt strategy, you can get out of debt faster. And you’ll end up with more savings and better credit, too.

3) It will simplify your debt payment each month

With a debt management plan, you can handle multiple debt payments and creditors at once. And you can do it with just one monthly payment to the credit counseling agency. Apart from that, if you have any accounts in collection, and are experiencing stressful collection letters and abusive calls, taking help from a reputable credit counselor may stop all of them instantly when the counselor takes over.

4) It could reduce your debt-related costs

A credit counselor will negotiate with creditors and reduce your current interest rates, reduce or waive fees, and may convert your repayment term to a longer one so that your monthly payments can be reduced to match your household budget. This way you may afford to pay every month and also save in the long run.


1) It can affect your credit score

Choosing a debt management plan offered by a credit counselor doesn’t affect your credit score directly. But some credit counselors may ask you to close your credit card accounts initially at the beginning of the process. If you do so it may eliminate your available credit and can increase your overall credit utilization ratio. Increasing credit utilization ratio may adversely affect your credit score. But, as soon as your credit debts are paid off fully, the credit score will gradually increase.

2) Debt management plans aren’t free

As per the National Foundation for Credit Counseling (NFCC), a credit counseling company may charge a setup fee as high as $50 with monthly fees of around $25. You may find the amount quite nominal as compared to your financial issues or becoming debt free. But you may consider the fact that a debt management plan may extend up to 3 to 5 years. Considering that period and the amount, it can affect your household budget. But, still…credit counselors can waive their fees if you’re experiencing severe financial hardship. You just have to make good relationships with them and express every issue you are facing without any hesitation.

3) Not all debts are eligible for credit counseling support

Debt management plans are tailored to help you pay off unsecured debts. These include credit cards, payday loans, personal loans, utility bills, medical debt, and accounts in collections. If you’re having issues with your secured debts (such as mortgage payments, auto loans, or home equity loans), a credit counselor may suggest ways to handle such debt payments through different financial strategies. But a credit counselor can’t work with these creditors to reduce your interest rates or anything. Along with such secured loans, student loans are also excluded from credit counseling services.

When is Credit Counseling best for you?

Credit counseling could be the best option for you. Particularly if you require free financial advice or are having issues managing unsecured debts.

Before choosing a credit counseling agency to manage your finances, you must remember that a credit counseling agency has some limitations while providing you services. If you’re struggling with secured debt, then a credit counselor might not be the option for you. You may need to consider other options, like a debt settlement option or bankruptcy.

If you’re still confused about whether or not to take the help of a credit counseling service, it is best to discuss your situation with a credit counselor, and then decide. Choosing the right option is the key to live a debt-free life. Good luck!

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