- 4 min read
- Free Credit Counseling options are available.
- Make sure that you start with the right debt solution.
- Credit counseling should be compared against all debt consolidation options.
Credit Counseling Tips & Free Do-It-Yourself Credit Counseling Advice
The cheapest credit counseling, in terms of fees paid, is the kind you do yourself, but if you're having trouble with that, you can find free or low-cost counseling from a variety of agencies and public entities. There are many non-profit credit counselors out there, but be sure to do your homework, so that you can know first what your credit and debt needs are, then determine what credit or debt solution is right for you and finally what type of provider you should choose. If you need a place to start your research on what debt solutions are out there, be sure to check out our tips on debt consolidation options and also our new debt and credit comparison. It is also important to not just focus on the fees charged by a credit or debt firm, but on what your needs are and how they are met by that specific solution or firm. For example, while you may pay a credit counselor a small monthly fee there is a chance that they can get you onto a personalized Debt Management Plan that saves you more money overall.
Do-It-Yourself Credit Counseling
Although it's not technically counseling, you can do many of the things that credit counselors do on your own - including getting on hardship programs, lowering your interest rates, cut your monthly payments with your creditors and saving on the total cost of your debts. This will certainly involve some work, however, as you will have to call and negotiate directly with your credit cards to qualify for their hardship programs.
Most services offer budgeting forms and money management advice. You can learn to budget your money by borrowing personal finance and budgeting books from the library or following advice available on Bills.com. If you need budget software, you can find several free online sites to help track your spending and bills. One that we recommend is Mint.com.
If your credit is decent, you can arrange a debt consolidation loan through a refinance loan, credit card balance transfer, personal loan, or home equity loan without involving a credit card counseling service.
You can also negotiate for lower interest rates directly, simply by calling your credit card company and asking. If you have serious debt troubles, you can explore debt settlement and this is a service that is time consuming by something that you can do on your own for free as well, if you have the skills, wherewithal and patience.
Professional Free Credit Counseling
If you've tried all of the self-managed credit counseling tools above on your own without success, or if you feel you need professional help, you can find it free. Many reputable counseling agencies offer free counseling for those in serious need. They may also provide free education materials and budgeting forms.
Certain programs are not free, however. Debt management programs nearly always include some kind of fee, although it varies by the amount of debt included and your ability to pay. Ask for a list of estimated fees before agreeing to anything.
If debt settlement is your only option, then it will also usually require a fee. Very few people succeed in settling debts on their own, but you can try.
Where to Find Credit Counseling and Debt Relief Providers
If you need consumer credit counseling, start by applying with Bills.com and our prescreened providers of general debt relief savings quotes.
If none of the above is available to you, you can also contact local housing agencies for help. Because they're funded by the government, they often provide free services.
Finally, contact a local community center to see if any local groups provide services. Several community centers offer money management classes that are free or low-cost. They may also be aware of volunteer organizations that provide free counseling.
If you need debt help, creating your own solution is often the cheapest option. However, many people need professional help. There's no shame in asking for it. You can find free counseling if you're willing to look a little harder, but don't delay if you have a serious debt problem. Use these tips and keep researching to find your own path to debt freedom.
Dealing with debt
Debt is used to buy a home, pay for bills, buy a car, or pay for a college education. According to the NY Federal Reserve total household debt as of Q4 2023 was $17.503 trillion. Auto loan debt was $1.607 trillion and credit card was $1.129 trillion.
According to data gathered by Urban.org from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 10% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.
Collection and delinquency rates vary by state. For example, in West Virginia, 15% have student loan debt. Of those holding student loan debt, 10% are in default. Auto/retail loan delinquency rate is 4%.
To maintain an excellent credit score it is vital to make timely payments. However, there are many circumstances that lead to late payments or debt in collections. The good news is that there are a lot of ways to deal with debt including debt consolidation and debt relief solutions.