Are you feeling overwhelmed by your credit, perhaps like you cannot get control over it? That is not uncommon, but there is help for it. One option for some people is using credit counseling, a service designed to help you navigate the repayment of the debt you owe.

What is Credit Counseling?

Credit counseling is a service that helps you to gain advice and guidance on your debts and money management. Whether for-profit or nonprofit, these services can help you create a budget to manage your current debts more effectively. They may also educate you on healthily using credit.

These organizations can also help you work with your creditors to get your debts caught up. As you consider these organizations, you should know the differences in how they work and which services they can offer to you.

How Does Credit Counseling Work

Credit counseling services work with people one-on-one to offer guidance and support based on their unique needs. This could mean that you work with a trained and licensed counselor to create a budget and work out a debt management plan. It could also mean that they offer you insight into how to build your credit so you can qualify to buy a home. They can provide you with access to free credit workshops or help you understand your credit report and scores.

Types of Credit Counseling

Both for-profit and nonprofit credit counseling services may be an option for you. However, knowing which one offers the types of services you need is essential. Some of the services to look for include:

• Budgeting and financial education: Some credit counseling services provide general budgeting and counseling services. This helps you to build a budget based on your income and expenses and then allows you to work towards your financial goals.
• Debt management plans: In some situations, the credit counseling professional will help you to create a plan to repay your debt to creditors. You will make a single payment to the agency, which, in turn, will distribute the amount to your lenders. This method lets you catch up on your debts and may help you pay them off over five or so years. There are often some fees involved in this process.
• Housing counseling: You can turn to a credit counseling service to help you build your credit and down payment to purchase a home in the future. They can also help you learn about grants and other options to help you save money on your first home purchase.
• Bankruptcy counseling: There are many reasons why people may need bankruptcy counseling, including that they cannot pay the debts they owe over time. These counselors can offer insight into whether there are ways to recover from this situation or if you qualify for bankruptcy.
• Student loan counseling: You may also want to speak to a credit counselor about access to student loans, grants, and other opportunities to reduce your overall cost of higher education.

Benefits of Credit Counseling

Working with a credit counseling service can offer a wide range of benefits to you:

• It is typically low-cost or free. That means you get information and guidance without worrying about the overall fees.
• If you need a debt management plan, these counselors have good relationships with lenders that may help you settle your debt for less than what you owe or reduce fees.
• The education provided is exceptional and will point you toward the best way to improve your financial future.

Choosing a Credit Counseling Service

If you consider the credit counseling path, know who you work with, as not all organizations are the same. Some things to look for include the following:

• Cost: Many services are free, though most will have some fees that you will need to pay for ongoing services.
• Accreditation and certification: Be sure you choose an organization that is properly licensed, accredited, and certified to provide these services in your area.
• Nonprofit: Nonprofit organizations are typically members of the Financial Counseling Association of America or the National Foundation for Credit Counseling. Loko for that to know they are a trustworthy organization to work with.

Alternatives to Credit Counseling

There are drawbacks to working with a credit counseling service, especially in a debt repayment plan, which can hurt your credit score in the short term. Consider exploring all of the options available to you:

• Communicate directly with your creditors to determine if they can help you.
• Talk to your mortgage lender about consolidation.
• Turn to a local free service or nonprofit organization for help with budgeting.

The key here is to know what all of your options are. Finding the right step forward can make a big difference in your financial future.