Best credit counseling services | Bankrate

Managing debt is no easy task, especially if you have a variety of debt from different sources such as credit cards, a mortgage, student loans and auto loans. Falling behind on just one may inhibit your ability to pay the others and jeopardize your financial future.

If you feel overwhelmed or just need some assistance, you may turn to resources like credit counseling for help. Credit counseling services are widely available and can help reduce your debt burden. If you go with this option, you need to make sure you find a reputable agency and know what to expect.

What is a credit counseling agency?

A credit counseling agency is an organization that offers advice and assistance to those in financial distress and having trouble managing their debt. This typically includes a variety of services, including:

• Bankruptcy guidance
• Credit report review
• Debt consolidation
• Debt management planning
• General financial advice (such as budgeting)
• Housing advice
• Student loan counseling

When you partner with one of these organizations, you’ll be assigned to a credit counselor who will analyze your case and work on your behalf to negotiate with your creditors. You can meet with them in person, online or over the phone.

Most credit counseling agencies are nonprofit, meaning their services may be available for free or at a reduced cost based on your situation and qualifications. 

How to choose a credit counseling agency

As you’re making a choice between credit counseling services, you’ll want to look for a few important features:

• Certified counselors: Before signing up, confirm if an agency uses certified credit counselors. Counselors with a reputable agency are likely certified in consumer credit, money and debt management and budgeting.
• No personal information upfront: The Consumer Financial Protection Bureau also warns consumers that they should be able to get free information from a credit counseling service without first providing personal information. If an agency insists on personal information up front, this is generally a red flag.
• Transparent fee schedule: One of the most important aspects of choosing a consumer credit counseling agency is selecting one that offers complete transparency regarding fees. Even though credit counseling agencies fall under nonprofit status, some charge hefty fees. Choosing one that discloses its pricing upfront is key.

Several resources can help you find approved and reputable credit counseling services, including your state’s attorney general office and consumer protection agency. You can also search for a list of approved credit counseling agencies through the Department of Justice.

The Financial Counseling Association of America and the National Foundation for Credit Counseling also offer directories for finding reputable agencies. You can also look for a credit counselor through a credit repair company. 

Highly rated credit counseling agencies

If you’re considering working with a credit counseling agency, here are a few of the top reputable options to explore.

American Consumer Credit Counseling

American Consumer Credit Counseling (ACCC) is a nonprofit credit counseling agency founded in 1991 and based in Auburndale, Massachusetts. It offers nationwide accessibility with multiple offices across the U.S.

The ACCC does not charge a fee for budget counseling. However, there is a one-time fee of $39 for enrollment into a debt management program. This enrollment fee may be waived or reduced depending on your state’s regulations or financial hardship. There is also a monthly maintenance fee of $7 per account with a minimum of $7 and a maximum of $70.

The ACCC has an A+ rating from the Better Business Bureau with an average customer rating of 4.96 stars out of 5.

Family Credit Management

Family Credit Management is a nonprofit organization based in Rockford, Illinois, that’s been helping consumers for over 20 years. It has worked with over 70,000 creditors across the country to assist clients from all ranges of debt.

Family Credit Management charges a one-time account set-up fee (approximately $40) to help cover the cost of establishing your account. The organization also has a $30 monthly account administration fee; however, that may be eligible to be reduced or waived.

Family Credit Management is a longtime member of the Better Business Bureau with an A+ record.

Cambridge Credit Counseling Corp.

Cambridge Credit Counseling operates a 501(c)(3) nonprofit agency. It was established in 1996. It offers a free initial consultation and a wide variety of services and financial literacy tools.

Cambridge Credit Counseling is a HUD-Approved Housing Counseling Agency and a member of the Financial Counseling Association of America (FCAA) and the National Foundation for Credit Counselors (NFCC). The organization employs third-party certified counselors who undergo extensive training and continuing education throughout their tenure.

Cambridge Credit Counseling provides a dashboard to track the payments made on your behalf (if you’re working under a debt management plan) and other valuable information.

Fees for Cambridge Credit Counseling’s services depend on your state. The average startup and monthly fees are $40 and $30, respectively, and are capped at $75 and $50.

Consolidated Credit Solutions

Operating as a 501(c)(3) nonprofit since 1994, Consolidated Credit Solutions has helped over 10 million people get out of debt. The agency offers various options for managing debt and other financial matters. It provides tools for personal finance, such as budgeting, money management, cutting spending and establishing savings.

Consolidated Credit Solutions also offers multiple debt and debt management services, including guidance on debt consolidation loans, balance transfers, bankruptcy, debt settlement and debt management. The agency also offers digital tools such as an extensive library of online financial resources and a mobile app for monitoring your debt management program.

Consolidated Credit is a member of the FCAA and a HUD-Approved Housing Counseling Agency, plus all counselors are certified personal financial counselors. No matter which path you’re considering for debt management, you can start the process with a free initial consultation.

GreenPath Financial Wellness

GreenPath Financial Wellness has over six decades of experience with credit counseling. Hundreds of credit unions, banks and employers partner with GreenPath, and it is available in all 50 states. It offers an extensive list of debt counseling services, including debt management solutions and payoff plans. You can work with one of its NFCC-certified counselors for guidance on credit, student loans or housing services.

GreenPath Financial Wellness doesn’t charge fees for counseling sessions, which last about an hour each. If you choose to move forward with a personalized debt management plan, you’ll be responsible for a one-time enrollment fee of $35 and a $28 monthly fee. 

Money Management International

Money Management International, or MMI, operates as a nonprofit organization and has worked with over 2.5 million individuals or families and helped clients repay $10 billion in debt.

It also stands out for it disaster recovery counseling. Through its Project Porchlight initiative, MMI works with individuals who live in a place where a federal- or state-declared disaster has taken place and offers a recovery plan through a certified counselor.

MMI offers free counseling sessions, but you will have an additional charge if you enroll in a debt management plan. The agency also offers 24/7 counseling access, or you can get started sooner with its online chatbot. MMI is HUD-certified and a member of FCAA and NFCC. 

Steps to take before seeking credit counseling

In some situations, working with a debt management plan and credit counseling service can help you get out of debt faster. However, it’s also a good idea to consider initial steps that may help you avoid additional fees or an impact on your credit:

• Try a debt repayment strategy: Many people have successfully overcome their financial troubles by using either the debt snowball or debt avalanche method. Both involve focusing on paying off one debt at a time until each balance is eliminated.
• Contact your creditors directly: You don’t have to use a credit counseling service to call and negotiate rates with your creditors. You can contact a creditor directly and ask for a reduction in interest rates, a change in your minimum payment or due date or a short-term modified payment plan.
• Look for balance transfer alternatives: You may be able to transfer a balance to another loan or credit card with a lower (or 0 percent) interest rate or lower minimum payment. This may help you reset until you can make larger monthly payments.

How to protect your finances when using a credit counseling service

If you decide to move forward with a credit counseling service, you can take steps to ensure you select a legitimate, reputable agency. The Federal Trade Commission (FTC) suggests you inquire about an agency’s licensure status, the qualifications of its counselors and its services. Avoid any agency that promises to fix all your financial woes or requires you to pay money up front before starting counseling.

You can also ask about the fee structure and what measures the agency uses to ensure your information remains secure and out of the hands of scammers or identity thieves. Inquire about employee compensation and whether the counselors earn more if you sign up for certain services (as this is often another red flag).

The bottom line

You don’t have to face your debt alone. Credit counseling services can offer support by helping you manage your payments and even negotiate on your behalf. Before partnering with a credit counseling service, ensure it’s legitimate by checking for membership with the FCAA or NFCC. Only work with organizations that have transparent pricing and use certified counselors.