What is a Credit Counselor?

• Definition: A trained expert providing financial advice on debt management, budgeting, housing, and bankruptcy.
• Common Features: Nonprofit agencies often provide free or low-cost services.
• Costs: Fees for services like debt management plans (DMPs) are typically capped at $75/month; enrollment fees are around the same.

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How Credit Counseling Works

• Initial Session: Free budgeting and financial review.
• Services Offered: DMPs, housing counseling, and bankruptcy support.
• Payment Plan: Under DMPs, you consolidate debt into one payment to the agency, which negotiates with creditors.

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Pros and Cons of Credit Counseling

Pros
- Access to financial experts for free/low cost.
- DMPs available even with bad credit.
- Can include bankruptcy and housing counseling.
- Possible negotiation for lower payments, fees, and interest rates.

Cons
- Monthly fees may apply.
- Lenders may not agree to a DMP.
- Credit score may drop temporarily due to account closures.
- Long-term debt resolution (3 - 5 years).

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How to Choose a Credit Counselor

• Certifications: Look for NFCC or FCAA-accredited companies.
• Special Services: Choose agencies offering tailored services for unique financial needs (e.g., veterans, housing).
• Fees: Ensure transparency in fee structure and availability of waivers for hardships.
• Reputation: Check reviews and for any legal actions.

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Top Credit Counseling Services

• Cambridge Credit Counseling Corp.
• Features: No debt minimum, nationwide availability, certified counselors.
• Fees: $40 average enrollment, $30 monthly (capped at $50).

• Best For: Comprehensive services with no minimum debt requirement.

• InCharge Debt Solutions

• Features: Military-focused resources, bankruptcy and housing counseling.
• Fees: $75 enrollment, $33/month.

• Best For: Veterans and military families.

• Money Management International

• Features: Low fees, no debt minimum, virtual services nationwide.
• Fees: $33 average enrollment, $25/month.

• Best For: Low-cost, widely available services.

• Consolidated Credit Solutions

• Features: Specializes in housing counseling, financial literacy for employers.
• Fees: $40 monthly average, $1,000 debt minimum.

• Best For: Housing-related financial advice.

• Debt Management Credit Counseling Corp. (DMCC)

• Features: Payday loan assistance, well-trained counselors.
• Fees: Varies by state, $5,000 debt minimum for DMPs.
• Best For: Unique services like payday loan help.

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Alternatives to Credit Counseling

• Debt Consolidation Loans: Combine high-interest debts into one lower-rate loan.
• Debt Settlement: Negotiate to pay less than owed (riskier option).
• Bankruptcy: Last resort; consult a certified counselor before proceeding.

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FAQ

• Does Credit Counseling Hurt Credit?
• Sessions don't harm credit, but actions like DMP enrollment might temporarily lower scores.
• Cost of Credit Counseling?
• Fees vary but often range from $0 - $75/month. Initial consultations are typically free.
• Is Credit Counseling a Scam?
• Reputable agencies are accredited and often listed by the Department of Justice.

Pro Tip: Always verify an agency's credentials and review its fee transparency before enrolling in any service.

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