What Is Credit Counseling?

What Credit Counseling Means#

Credit counseling is a service that reviews a person’s income, debts, and expenses to help them find a path forward. Cambridge Credit Counseling is a 501(c)(3) nonprofit agency that offers credit counseling along with housing counseling, reverse mortgage counseling, and bankruptcy counseling. A debt management plan is not credit counseling itself, though setting up a plan is one possible outcome of a credit counseling session.

A Brief History of Credit Counseling#

Credit counseling has been around since the early 1950s. It was created by credit grantors to promote financial literacy and help consumers avoid bankruptcy. The current credit counseling model didn’t really start to take shape until the early 1960s, when the first local agencies began offering financial education and counseling to consumers face to face.

While the current model still focuses on financial education as its main objective, people seek assistance through credit counseling agencies because they need help to get out of debt. Over the decades, credit counseling agencies have developed relationships with creditors in an effort to help consumers get out of debt through the establishment of debt management plans.

What a Counseling Session Covers#

During a credit counseling session with Cambridge Credit Counseling, a certified counselor looks at a person’s full financial picture, including unsecured debts like credit cards. Cambridge Credit Counseling offers credit counseling as a free service to consumers who are having difficulty paying credit card and other unsecured bills. The counselor may also mention that creditors sometimes offer a reduction in credit card interest rates to clients working with a consumer credit counseling agency such as Cambridge Credit Counseling.

The Free First Session#

Credit counseling from Cambridge Credit Counseling is a free service for consumers. There is never any obligation to enroll in a debt management plan after a session, so a person can use the appointment simply to get clear, honest information about their options.

Certified, Accountable Counselors#

Counselors at Cambridge Credit Counseling are certified through the National Foundation for Credit Counseling, and many staff members also hold certification through the Partnership for Financial Education. Cambridge Credit Counseling is a member of both the National Foundation for Credit Counseling and the Financial Counseling Association of America, and it is accredited to the FCAA’s Code of Practice, a set of rules that governs how credit counseling agencies act.

Who Credit Counseling Suits#

Cambridge Credit Counseling provides credit counseling as a free service for consumers who are looking for ways out of debt, especially those struggling to keep up with credit card and other unsecured bills. This makes it a useful starting point for anyone who feels unsure about where their money is going or how to handle growing balances.

Choosing a Credit Counseling Agency#

Choosing a credit counseling agency is not as simple as going to the store to try on a new pair of shoes. There’s a lot to consider, so take a little time to do some research and find answers to a few questions:

• Does the agency have a good BBB rating? Search the Better Business Bureau’s website to see what its rating is, whether it has a lot of complaints, and whether those complaints have been resolved.
• Is the agency recommended by others? Consumer review sites are a good starting point for finding out an agency’s reputation. Search a site like TrustPilot.com to see if the company has a high rating and whether others like you have posted comments about their experience with that agency. You can also check ConsumerAffairs.com and read the reviews.
• Is the agency licensed in your state? Most states have laws and regulations governing credit counseling agencies that serve their residents. You should be able to find licensing information on the agency’s website. If not, check with your state’s Attorney General’s office. Some states do not have licensing requirements, but it’s always a good idea to check.
• Does the agency charge excessive fees? Credit counseling and debt management plan administration are two different services. Most reputable nonprofit credit counseling agencies offer a free debt analysis as part of their charitable mission. If an agency charges a fee for the debt analysis, it’s probably best to keep looking. However, there are almost always fees associated with the establishment of a debt management plan, and those fees are usually regulated by each individual state.
• Are the credit counselors certified? Be sure the credit counselor is certified by a third party and that the certification is current.

If it feels wrong, trust your instincts and keep on looking. There’s no quick fix to getting out of debt.

What to Do Next#

Anyone who wants a clearer picture of their finances can reach out to Cambridge Credit Counseling for a free credit counseling session. The session comes with no obligation to sign up for any program, so it is simply a chance to talk through options with a certified counselor.