Is a Credit Counselor Right for You?

Table of contents

While some people do just fine with DIY budgeting, others need a little help managing their finances and maintaining healthy credit.

Key takeaways

  • A credit counselor helps create a personalized plan for getting back on track with your finances and maintaining healthy credit.
  • They may recommend a debt management plan, but participation can negatively impact your ability to access new credit in the future.
  • Finding the right credit counselor involves vetting potential counselors through the consumer protection agency and avoiding credit repair scams.

What is a credit counselor?

A certified credit counselor is someone who looks at your entire financial situation and helps create a personalized plan for getting back on track.

If you work with a credit counselor, they will help you obtain copies of your credit reports, advise you on managing money and debts, and work with you to develop a budget.

So how might working with a credit counselor be better than a do-it-yourself plan?

  • The counselor will help you take time to think thoroughly about your finances.
  • The counselor is not emotionally invested in your past decisions and may help you see them from a different perspective.
  • A credit counselor will encourage you and facilitate positive change.



What is a debt management plan?

Reputable credit counselors can help you with budgeting and managing your income and debts. Sometimes, they’ll recommend a debt management plan (DMP).

If you establish a DMP, the credit counseling agency will work with you and your creditors to develop a payment plan for your unsecured debts, such as credit cards or medical debt. You will make monthly payments to the credit counseling organization, which will disburse payments to your creditors.

Participation in a DMP can negatively impact your ability to access new credit in the future. You should ONLY sign up for a DMP if you have spent time reviewing your complete financial situation with a certified credit counselor.


Why a credit counselor may be right for you

Connecting with a credit counselor may be a good decision if you:

  • Feel helpless in dealing with negative information on your credit history
  • Need the education to establish positive financial habits
  • Don’t want to make any mistakes that will worsen your situation


How to find the right credit counselor for you

If you’re working with a loan officer, ask them for recommendations on reputable credit counselors. You can also try an Internet search for credit counseling near you. Once you’ve found some potential credit counselors, you can vet them through the consumer protection agency.

Reputable credit counselors should give you free information on their services. Any credit counseling agency that isn’t an open book when it comes to their services may be a red flag. Do not give out any of your personal information before getting detailed information on the services they offer.


What to watch out for

There are a lot of reputable credit counselors who can help you get your finances in check. Sadly, there are also a lot of scams out there that you need to avoid. When researching credit counselors, be on the lookout for red flags so you can steer clear of those credit repair scams.

Jacquelyn Sublett
Jacquelyn Sublett

I love teaching and writing on real estate, finance and mortgage topics. I find it fulfilling hearing stories of first time home buyers who we have helped with the home buying process. Writer for the Hero Homebuyer Programs™

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