Chris O'Shea
If you’re struggling with paying off debts and other basic financial tenets, you might want to consider a credit counselor. These professionals can help navigate debt at a low cost. Here’s what you should know.
What is a Credit Counselor?
A credit counselor is a professional who works for a non-profit, credit counseling agency. The agencies offer low-cost and free workshops on everything from budgeting to refining your long-term savings goals. Counselors offer a more in-depth, personalized take on your financial situation. Here are some of the help you could get from a credit counselor:
- Creating a savings plan
- Revising or creating a budget
- Paying down debts
- Managing monthly bills
- Creating or improving an emergency fund
Debt Management Plan
One of the main services that credit counselors offer is a debt management plan. If you opt for this service, the counselor will help with the following:
- Lower credit card rates.
- Negotiate bills.
- Pay down your debt balances.
You’d be required to close your credit card accounts and pay the agency a monthly fee, which would then be used to pay down your debts. These plans are often a last resort but can be helpful. The plans typically last for several years.
Credit Score Impact
If you enroll, your credit score may dip for a while. Also, your enrollment may show on your credit report, which could be a red flag to lenders.
Cost of Counseling
A credit counselor is often available for a small price. The federal government regulates the fees. Typically, you will pay a set-up fee and then a monthly fee. The former is capped at $79, while the latter can be between $20 and $40 monthly.
Do One Thing: Use a reputable site — like the National Foundation for Credit Counseling — to find a credit counselor.
Jean Chatzky
