What Happens During a Credit Counseling Session?
A certified credit counselor reviews your income, expenses, debts, and assets. They help you create a realistic budget, identify problem areas, and understand all your debt relief options — including self-managed payoff strategies, debt management plans, consolidation, settlement, and bankruptcy. A first session is typically free and lasts 60–90 minutes. Counselors may provide ongoing support or refer you to appropriate resources based on your situation.
How Do You Find a Reputable Credit Counseling Agency?
Look for agencies approved by the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA). These organizations set standards for counselor certification and fee transparency. The U.S. Department of Justice also maintains a list of approved credit counseling agencies for bankruptcy purposes. Avoid for-profit companies advertising debt settlement services under the guise of credit counseling — they operate very differently.
Is Credit Counseling Different from Debt Settlement?
Yes — significantly. Nonprofit credit counseling helps you understand options and, if appropriate, sets up a debt management plan where you repay debts in full at reduced interest rates. Debt settlement companies negotiate to pay less than the full amount owed, requiring you to stop payments, damage your credit severely, and pay large fees. Credit counseling preserves your credit where possible; debt settlement deliberately damages it.
Frequently asked questions
Does credit counseling hurt my credit score?
Credit counseling itself does not affect your credit score. Enrolling in a debt management plan through a counselor may close certain credit cards, which could temporarily reduce your available credit, but making consistent on-time payments through a DMP improves your credit over time.
Is credit counseling free?
Initial consultations at nonprofit agencies are typically free. Monthly fees for debt management plans average $25–$35. Some agencies offer fee waivers for those who cannot afford them. Avoid any agency charging large upfront fees or that will not provide pricing in writing before you agree to services.