What It Means
Credit counseling is a service provided by certified professionals who help consumers manage their finances and debt. Legitimate credit counseling agencies are typically non-profit organizations accredited by the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA). Services include budget analysis, debt management plans (DMPs), financial education, and housing counseling. A debt management plan through a credit counseling agency can consolidate credit card payments into a single monthly payment, often with reduced interest rates. While credit counseling itself does not directly affect your credit score, enrolling in a DMP may be noted on your credit report and could influence some lenders' decisions.
Frequently Asked Questions
Is credit counseling worth it?
Yes, for many people. Legitimate non-profit credit counseling agencies provide free or low-cost advice that can help you create a plan to manage debt and improve your financial situation.
Does credit counseling hurt your credit?
Credit counseling itself does not affect your credit score. However, enrolling in a debt management plan may appear on your report and some lenders may view it as a sign of financial difficulty.