When You Should Consider Credit Counseling

Credit Info

When your bills are getting out of control and you’re getting deeper and deeper into debt, it may be time to get help. That help can come in the form of credit counselors, who can analyze your situation and set you up with a workable solution that includes a debt management plan. You may be embarrassed to make that first phone call, but all calls are confidential. If you’re worried about credibility, most credit counselors are non-profit organizations with good reputations in the community and provide a variety of services that meet your needs, whether in person, online or over the phone, says the Federal Trade Commission.

Why Do I Need a Credit Counselor?

If you are getting repeated calls from debt collectors, living paycheck to paycheck, fighting constantly with your spouse about finances and hiding bills from your significant other, you likely have a credit problem. Other warning signs include the need to tap into high-rate resources like payday loans and cash advances, max out your credit cards each month, and “borrow” money from your retirement account just to stay on top of bills. In addition, if you have no idea just how much debt you’ve accumulated, you may be in need of a credit counselor to help you through this rough financial patch. It will only get worse if you don’t steer clear of building more and more credit.

Sorting out Credit Counselors

With Americans as a whole owing about $721 billion in outstanding credit cards, it’s no wonder more and more people are falling into debt. In fact, the average household owes nearly $16,000 in credit card debt, according to US News and World Report. Yet only a very small percentage actually seek out counseling. Perhaps it’s the stigma involved with seeking help in a time of vulnerability. Perhaps people think credit counselors are not legit. Or maybe they think that consulting a credit counselor will damage their credit score, but this isn’t true – simply talking to a credit counselor has no effect on credit scores. Many organizations that seek to help you with your credit situation are reputable. You just have to put the research in to make sure the agency you choose is the right one. Inquire about a particular agency with your local financial institution or consumer protection agency, and check with the Better Business Bureau. Don’t confuse debt consolidation companies with credit counselors, though. Credit counselors advise you in developing a budget and suggesting lifestyle changes to come up with a debt management plan. These sessions are typically free. On the other hand, debt consolidation companies negotiate with your creditors to get your amount of debt down by combining cards and reducing interest rates. These companies do charge for their services, many of them with high fees.

Get Help

If you don’t know where to start, try the National Foundation for Credit Counseling, where you’ll get access to a listing of reputable member agencies offering confidential counseling one of three ways: over the phone, in face-to-face meetings and online. Be ready when you call by gathering your latest pay stub, creditor statements, assets, monthly expenses and collections notices. Credit counselors can help you feel less overwhelmed with your financial obligations through helpful, friendly assistance in the form of analysis and debt management plans.

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