Finding Free or Low Cost Credit Counseling Services

Finding Free or Low Cost Credit Counseling Services

Credit counseling can be an incredibly valuable resource for people struggling with debt. But not all credit counseling agencies are created equal. Some charge really high fees or push debt management plans (DMPs) when you may not need one. The good news is there are lots of legit nonprofit credit counselors that offer free or very affordable services.

In this article, we’ll walk you through how to find a quality nonprofit credit counseling agency so you can get the help you need without going broke. We’ll also give tips on what to look for in a good credit counselor and what to avoid.

What Does a Credit Counselor Do?

When you work with a credit counselor, they’ll take a deep look at your full financial situation. This includes reviewing your income, expenses, debts, credit reports and more. From there, they can provide advice and guidance on:

• Creating a budget
• Prioritizing debts
• Negotiating with creditors
• Disputing errors on your credit reports
• Consolidating debt
• Enrolling in debt management plans (DMPs)
• Filing for bankruptcy (if appropriate)

The counselor’s job is to explain all your options and help you come up with a personalized plan to tackle your debts. For many people, just having an expert review their full financial picture and lay out the pros and cons of different options can be tremendously helpful.

Nonprofit vs For-Profit Credit Counseling

When choosing a credit counseling agency, your best bet is to go with a legitimate nonprofit. Nonprofit credit counselors are mission-driven organizations that offer services to help consumers – not to make a profit. They have to meet rigorous standards to maintain their nonprofit status.

On the other hand, for-profit credit counseling companies exist to make money for their owners and shareholders. This doesn’t mean they’re all scams, but it does create an incentive to push products that aren’t in your best interest or charge excessive fees.

Some signs an agency is really a for-profit in disguise:

• Charges high upfront fees before providing services
• Pushes debt management plans as the only option
• Refuses to provide services unless you enroll in a DMP
• Spends more on marketing than actual counseling
• Has complaints filed with consumer protection agencies

Sticking with well-established nonprofits can help avoid predatory agencies.

Finding Legit Nonprofit Credit Counselors

Here are some tips for locating high-quality, ethical nonprofit credit counseling agencies:

Check with the NFCC

The National Foundation for Credit Counseling (NFCC) is the largest and longest-standing nonprofit financial counseling network. All member agencies have to meet high standards for accreditation.

You can search for NFCC member agencies on the NFCC website by location. These are all legitimate nonprofits devoted to helping consumers.

Look for BBB accreditation

Check to see if an agency is accredited by the Better Business Bureau (BBB). The BBB thoroughly vets businesses based on criteria like trustworthiness, transparency and more. Their seal of approval is a good sign.

Do your research

Look up any agency you’re considering on GuideStar, Charity Navigator, or other sites that provide information on nonprofits. Check for evidence of legitimate counseling services, reasonable executive pay, and a lack of major complaints.

Ask about fees

Counseling services should be free or very low cost. Ask upfront if there are any charges and get fee estimates in writing before providing any personal information.

Read reviews

Search for client reviews on Google, Facebook, BBB and other sites. Beware of fake reviews, but if multiple real people report bad experiences, that’s a red flag.

Check state approval

Most states maintain lists of approved nonprofit credit counseling agencies. For example, California keeps this list: https://dfpi.ca.gov/check-out-your-credit-counseling-agency/. Checking for state approval helps verify nonprofit status.

6 Top Nonprofit Credit Counseling Agencies

Based on criteria like reputation, services, affordability and more, here are six highly-rated nonprofit credit counseling agencies to consider:

1. Money Management International

MMI is one of the largest, most reputable nonprofit financial counseling agencies. They offer free phone, online and in-person sessions with certified counselors. You can also enroll in debt management plans through MMI for a low monthly fee.

Website: https://www.moneymanagement.org/

2. GreenPath Financial Wellness

GreenPath is a nationwide nonprofit providing free financial counseling and education. Their counselors have assisted millions of people with debt, credit, bankruptcy and housing issues.

Website: https://www.greenpath.com/

3. American Consumer Credit Counseling (ACCC)

ACCC offers free credit counseling and debt management services through a national network of offices. They also provide free educational resources on credit, debt and budgeting.

Website: https://www.consumercredit.com/

4. InCharge Debt Solutions

InCharge is a nonprofit focused on credit counseling and debt relief. They offer free phone counseling nationwide. InCharge is accredited by the BBB, NFCC and COA.

Website: https://www.incharge.org/

5. Clearpoint Credit Counseling Solutions

Clearpoint is a NFCC member agency with over 50 branches across the U.S. They provide a range of free counseling services to help people address debt, credit and housing issues.

Website: https://www.clearpoint.org/

6. Credit.org

Credit.org is a COA-accredited nonprofit that’s provided financial education and counseling for over 20 years. They offer free credit counseling nationwide.

Website: https://www.credit.org/

The Credit Counseling Process

Here’s a quick rundown of what to expect when you contact a nonprofit credit counseling agency:

1. Initial consultation

You’ll have a free intro call, video chat or in-person meeting with a certified credit counselor. They’ll ask about your financial situation to see if they can help.

2. Document review

You’ll need to provide documents like pay stubs, bills, credit reports and debt statements. This gives the counselor a full picture of your finances.

3. Action plan

The counselor will review your options and work with you to develop a personalized action plan. This may include a debt management program, budgeting help, credit repair tips and more.

4. Follow-up

Most agencies provide ongoing support to track your progress and adjust your plan as needed. You can also return for additional counseling sessions down the road.

Debt Management Plans (DMPs)

Many credit counseling agencies offer debt management plans (DMPs). These allow you to consolidate multiple debts into one monthly payment. The agency negotiates lower interest rates and monthly payments with your creditors.

Pros of DMPs:

• One monthly payment
• Lower interest rates
• Debt free faster
• Avoid bankruptcy

Cons of DMPs:

• Monthly program fee (around $25-50)
• Hurt your credit initially
• Creditors may not accept
• Ongoing creditor communication

A credit counselor can advise if a DMP is right for your situation. Be wary of agencies that push DMPs without exploring other options.

Beware of Debt Settlement Companies

Debt settlement firms should not be confused with credit counseling agencies – they are very different! Debt settlement companies charge hefty upfront fees to attempt reducing your debt through lump-sum settlements vs repayment plans.

The FTC warns that many debt settlement firms engage in deceptive practices, charge excessive fees and fail to actually settle debts as promised. It’s best to avoid them if possible.

The Bottom Line

Free or low cost credit counseling from legitimate nonprofits can provide tremendous value. Their expert guidance makes it easier to tackle debt and get your finances on track.

Just be sure to do your homework to avoid predatory agencies. Vet them thoroughly and ask lots of questions before sharing personal information or paying fees.

If you’re feeling overwhelmed by high interest credit card balances, medical bills or other debts, reach out to a reputable credit counseling agency. They can help you understand your options and develop an action plan to become debt free.