Credit counseling is the process of reviewing your personal finances with a certified credit counselor. Together, you can develop a plan to pay off credit card debt and gain the financial knowledge needed to build long-term stability.
Although it may feel isolating, you are not alone. Millions of Americans are struggling with debt. With so many debt repayment options available, how do you know which one to choose? This article explains credit counseling and who could benefit from it.
Key Takeaways
- Credit counseling is a personalized financial review of your income, expenses, budget, and debts. A certified counselor can help you identify practical repayment options.
- Credit counseling may help if credit card payments are becoming difficult, interest charges are slowing your progress, or you are unsure how to repay your debt.
- Credit counseling does not require enrollment in a Debt Management Program. A counselor may recommend budgeting changes, self-directed repayment, or a structured debt management plan.
- A Debt Management Program may simplify credit card debt repayment by combining eligible debts into one monthly payment. Participating creditors may also reduce interest rates or fees.
What is credit counseling?
Credit counseling is basically a partnership that’s meant to close the gap between where your finances are now and where you want them to be. It is not only about paying off your debt but building a long-term healthy financial foundation with financial literacy. Credit counseling aims not just to get you out of debt but to give you the tools to remain out of debt and be financially free.
Who might need credit counseling?
When it comes to credit counseling, there are certain people we see benefit from the service. “Our main client is just going to be a client who is just overwhelmed with the credit card debt”, said Melissa Ruffin a Certified Credit Counselor from ACCC. According to Melissa, credit counseling may be worth exploring when:
- You’re struggling to make even minimum payments.
- You’re making credit card payments, but your interest is still growing.
- You’re considering bankruptcy.
- Making payments is beginning to feel stressful and overwhelming.
- You don’t have a plan to pay off credit card debt.
Non-profit credit counseling vs for-profit debt relief explained by an ACCC credit counselor.
Nonprofit credit counseling and for-profit debt relief companies can approach debt very differently. Nonprofit credit counseling organizations like ACCC focus first on reviewing your complete financial situation, including your income, expenses, debts, and goals, and helping you understand the options available to you. You are not required to enroll in a Debt Management Program to receive counseling.
ACCC credit counselor Matthew Richards explains, “We [ACCC] are a nonprofit. So, with that being said, there are no ulterior motives for us to push people one way or another. So, when people call us, they can rest assured knowing that they’re going to get the best advice for their situation.”
For-profit debt relief companies, on the other hand, typically earn revenue by selling a particular debt relief service, such as debt settlement. With nonprofit credit counseling, the goal is to help you evaluate your options and decide which approach makes the most sense for your circumstances. If a Debt Management Program is appropriate, nonprofit agencies may also offer lower or more regulated fees than some for-profit debt relief services.
Financial Literacy
Non-profit credit counseling also has more of a focus on financial literacy. The aim is to not only be debt-free, but to give you the tools and financial knowledge to remain debt-free. Non-profit credit counseling agencies will also have additional financial resources like a personal finance newsletter or financial education articles available on their website or app. Some for-profit debt relief companies offer financial literacy. But you might be looking at an additional fee or charge for financial coaching, and the same goes for a budget review, which is included in ACCC’s credit counseling.
FTC guidance on finding a reputable credit counseling organization
The Federal Trade Commission (FTC) offers guidance to help consumers identify reputable credit counseling organizations. In the FTC’s article, Choosing a Credit Counselor, it notes: “Most reputable credit counselors are non-profit and offer services at local offices, online, or on the phone.” The article additionally emphasizes that a strong organization should provide free educational resources and employ certified counselors. All ACCC credit counselors are certified by the NFCC.
Receive credit counseling through American Consumer Credit Counseling (ACCC)
American Consumer Credit Counseling is a non-profit credit counseling agency and proud NFCC member that helps people understand their options with support from a certified credit counselor. Receive a free, confidential consultation to help you review your budget, explore possible repayment options, and identify realistic next steps toward your financial goals. ACCC is here for you even if our Debt Management Plan (DMP) isn’t a good fit for you; we’ll show you your other options and help you make a plan.
Hear it from an ACCC Client.
ACCC’s credit counseling can help you figure out the best path to take for your debt and help you improve your long- term financial well-being. Don’t just take ACCC credit counselors’ word for it. Hear it from real ACCC clients like David B. Here is a snippet from his testimonial and how he found success with our program:
“Once I depleted my 401k, I just could not get in that rhythm of saving. I was worried about money and worried about debt. And so I called ACCC. So all in all, I learned how to save money. I learned how to prioritize. I learned those tools about how to save, how to prioritize, how to be more sensible with my spending. And I really have ACCC to thank for that. It helped me give my mom a better quality of life and myself.” – David B.
To hear more of David’s story, click here to see the full video of his testimonial on ACCC’s YouTube Channel.
Examples of people who could benefit from credit counseling.
In this section, we’ll create a scenario to help show you the type of people that can benefit from credit counseling.
Mark (Fictional Example)
Mark has a good job and budget that he follows somewhat closely. There was recently an emergency in his family, and he depleted his emergency fund trying to pay for the unexpected medical expenses. Mark now uses credit cards to keep his bills up to date. He makes minimum payments on time every month, but his balance is not shrinking. In this hypothetical situation, contacting ACCC early, before he falls behind or feels stressed, could help Mark review options and build a more practical debt repayment plan.
Jenna (Fictional Example)
Jenna has tried budgeting before, but it didn’t really stick, and she is unsure if she is doing it correctly. Most of her money goes to her credit card payments. She rarely remembers to put money into her savings. Jenna feels like the minute she gets her check from work, it’s already gone. She wants to get her credit card debt paid and feel more financially stable. In this fictional scenario, an ACCC credit counselor could help Jenna create a practical budget and explore repayment options that fit her current income and expenses.
Taking the next step with confidence.
Credit counseling isn’t for everyone, but for those it helps, it can make a notable effect on their financial life. Credit counselors are trained to help you evaluate your situation and create a plan. As Ben Luthi writes in the Experian article Is Credit Counseling a Good Idea?, “If you’re falling behind on credit card bills or juggling minimum payments across multiple accounts, a counselor can help you create a realistic plan.” Credit counseling may also provide clarity if you feel overwhelmed by debt, are unsure where to begin or are considering bankruptcy.
FAQs
Q: Is credit counseling only for people who are deeply in debt?
A: No. Credit counseling can help at many stages of your financial path. Whether you’re just starting to feel strained or already having trouble keeping up with payments, speaking with a counselor can help you understand your next step.
Q: What happens during a credit counseling session?
A: During a session, a counselor reviews your financial situation, including your income, expenses, budget, and debts. From there, they can walk you through possible repayment options and help you make a plan that fits your needs.
Q: How is non-profit credit counseling different from for-profit debt relief companies?
A: Non-profit credit counseling focuses on helping you find the best solution for your situation, not on pushing a specific product or program. At ACCC, we work to provide honest guidance, clear options, and support that puts your financial well-being first.
Q: Will I be pressured to join a program?
A: No. A good credit counseling experience should help you understand your choices, not pressure you into one. At ACCC, we believe you should feel knowledgeable and confident before making any decision.
Q: Can credit counseling help if I’m not sure I need a Debt Management Plan?
A: Yes. A Debt Management Plan (DMP) is only one possible solution. Credit counseling can still be valuable even if a DMP is not the right fit. Because it gives you an opportunity to review your full financial picture and look into other choices.
Q: Is credit counseling confidential?
A: Yes, your consultation is confidential. We understand that talking about money can feel personal, so our counselors aim to deliver a supportive and judgment-free experience.
Q: How do I know if credit counseling is right for me?
A: If debt is causing stress, your balances aren’t going down, or you’re unsure how to move forward, credit counseling may be a beneficial next step. A free consultation can help you talk through your situation and decide what makes sense for you.
If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today.
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