What is Credit Counseling

Learn more about the different options available to help you become debt-free.
Find out what debt consolidation means and how it can help you lower your monthly payments.
Consumer credit counseling, a form of debt management, is ideal for those that don't qualify for a loan but still want a lower rate. Get more information here.
Read what you need to know about this alternative to bankruptcy. Cut your payments and find a plan that fits your monthly budget.
Thinking about making a fresh start? Discover everything you need to know about the different types of personal bankruptcy and small business bankruptcy.

Consumer Credit Counseling

Credit counseling is a service normally provided by a non-profit organization. Credit counseling companies are solely focused on one thing, getting you back on the right track financially. Companies providing this service will help you create a debt management plan (DMP), which is a formal agreement between you and your creditors. Entering into a debt management plan can help you lower your interest rates and shorten your payoff schedule. Some creditors may also be willing to provide additional help by wiping out any over limit fees you may have accumulated.

Is Credit Counseling Right For You?

Even through credit counseling can help you lower your credit card interest rates and monthly payment, it still isn't a program for everyone. When you enter into a debt management or credit counseling program, you are basically telling your creditors that you need help. This can put your creditors on a heightened alert that may result in them closing your accounts. Because credit counseling normally is a program for people that are finding it hard to satisfy their current obligations, people entering this type of program are required to refrain from taking out any additional loans.

When you enter into a credit counseling program, your credit report will be marked to show that you are receiving assistance from a third party. This notation will be placed on your credit report for the time you are in the program. However, once you complete the program this mark is removed.

How Much Does Credit Counseling Help?

Credit counseling might be right for you if you find yourself in over your head with bills, have a low credit score, or are simply looking to organize your financing. When looking to consolidate debt, an unsecured debt consolidation loan is usually preferred for most individuals. If a loan is not obtainable, the next best option is credit counseling, which can lower your rates similar to a loan. If you are unable to make the minimum payment required to enter the debt management program, your only other options left are debt settlement or bankruptcy.

The amount your interest rates will be lowered through a credit counseling program varies and will be heavily based on your hardship. If you have a significant, provable hardship, your rates can be lowered to as little as two percent. The average, however, is around nine percent interest. Any reduction in interest rates can greatly lower your payment depending on your current situation. If you would like more information about credit counseling or any of the debt consolidation options available, fill out our simple credit counseling solutions form or call us toll-free at 1-800-781-5187 to speak with one of our knowledgeable financial search specialists. Our free service will match you with the highly rated consumer credit counseling service companies to help you manage your debt.

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