How Much Does Credit Counseling Cost?
Credit counseling may be needed if you are having financial trouble or have had it in the past. If you are finding yourself in a pinch when it comes to your finances, it may be time to turn to a credit counselor.
Your credit score is important for so many reasons. If you are trying to purchase a home, car, or if you are trying to take out a loan for school or other reasons, your credit score will determine whether or not you are even eligible, and if so, how much interest you will have to pay. When you get in trouble financially and are not able to pay your bills, your credit can take a serious hit.
Credit counselors can help you get back on your feet and decrease the amount of debt that you have. These counselors will also be able to offer financial advice that can help you get out of debt and restore your credit to the level it should be.
How much is it?
- Most of the time, a credit counselor is going to be free. As long as the service is used through a non-profit organization, there should not be a bill at all. However, if a for-profit organization is used, they will more than likely charge a monthly fee. This fee can be a percentage of the debts owed or a flat fee. If the company is going to charge a first-time initiation fee, which is rare, plan on spending less than $50 for credit counseling.
- For example, CreditAdvisors.org charge nothing. If a debt management plan is required, a monthly fee will apply.
- According to HowStuffWorks.com, they claim that most non-profits will not cost a dime. If there is a small setup fee, it will typically be between $10 to $50.
What is going to be included?
- Credit counselors are certified experts who will use their tailored programs to meet your financial needs. They will help understand your situation, offer solutions and get you on the road to financial freedom. You can meet with counselors in person, over the phone or over the internet. They will be able to help stop collection calls, start payment arrangements and develop a solution that satisfies your needs.
- During your first session, the credit counselor will review your financial situation and offer a list of solutions that may be suitable for you. Once they know your situation, they can compile all of your debts into one easy monthly payment and help establish a detailed plan.
- A certified credit counselor will understand basic theories, principles, issues, and certain techniques. All information that is shared will be confidential.
- Universities, credit unions, and military bases can offer credit counselors free of charge.
What are the extra costs?
- As stated above, if you are going to choose a profit agency, there may be a small fee every month for them to manage your debts. These fees are often less than $75 per month. However, this is optional. A non-profit agency will be able to create a plan and just tell you what to do down the road.
- Part of credit counseling is learning how to manage your money and pay off your debts. Although the service is free, making all the payments you owe from previous collection agencies will still be necessary.
- There are many books that offer financial advice, explain the inner workings of the credit system, and teach you how to form a monthly budget and stick to it. These self-help books can be purchased in any bookstore or online and can cost from $10 to $30.
Tips to know:
- Always see how long the organization has been in business. The longer they have been in business, the more likely they are going to be able to help you out.
- Try to avoid the for-profit organizations and try a non-profit before anything else.
- Always make sure that the company is a current member of a trade association. Two major names include the National Foundation for Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies. Not all states will require agencies to be licensed; however, it does not hurt to see what your local state laws are. If they do require a license, just make sure your counseling service has one in good standing.
- If you are considering bankruptcy, the Department of Justice can help you locate a locally approved agency.
- For-profit agencies will require that you sign a long-term contract. If you do, it does not hurt to have an attorney look it over.
How can I save money?
- Most counselors are going to be free. If you are finding out that they are going to charge, it is important that you look elsewhere.
- If you feel uncomfortable talking to a stranger about your finances, consider a self-teaching method. This can either be done via books or online videos.