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How Does Credit Counseling Work?

Mounting bills, calls from creditors, and constant anxiety are symptoms of someone suffering from a mountain of debt. If this is you, seeking financial assistance can help you get out of this difficult situation. Your first step? Make an appointment with a credit counselor.

What is a credit counselor? A credit counselor is a certified professional who offers guidance and helps you better understand your options for managing your expenses.

How does it work? Before meeting with a credit counselor, you’ll want to make sure you have a list of your current expenses in order, including proof of monthly income and credit card statements. During the appointment, your credit counselor will go over all your documents and get a good overview of your financial status. You may even be provided a free review of your credit reports.

What’s next? Mapping a plan of action. After your credit counselor has gone over everything with you, they will help you plan a budget, explain your options, and even offer information on educational opportunities for greater financial awareness. 

What’s a Debt Management Plan? Your counselor may suggest that it would benefit you to enroll in a debt management plan. If you go this route, your counselor will work with your credit card lenders to consolidate your loans into one affordable monthly payment, usually with a lower interest rate, so that you can pay off your debt in three to five years.

Is it worth it? The National Foundation for Credit Counseling released a report in 2016 that supported the benefits of credit counseling. The report found that 73% of the study sample now pay their debt more consistently and 70% have improved their overall financial confidence.

Ultimately, it’s up to you to make the change in your life, but working with a credit counselor can help set you on the right path and aid you on your journey toward greater financial health.