Credit counseling is a type of advice and assistance that revolves around learning more about personal finances and debt. A credit counselor focuses on helping individuals develop an organized budget, create a debt repayment plan with creditors, and achieve financial stability. It’s important to note that credit counseling can provide advice and guidance, but it won’t resolve your financial problems, it requires commitment on the part of the person being advised for it to be successful.
When starting the process of credit counseling, it’s important to research reputable organizations in your area. Make sure that you select an approved credit counseling organization as they are Non-Profit, more likely to provide quality care and advice. Additionally, it’s recommended to reach out to several different providers before selecting one. Be sure to ask questions about the services provided and any fees associated with those services.
When beginning the credit counseling process, you’ll need to be able to provide your counselor with a comprehensive view of your financial situation. To do this, start by preparing an in-depth budget for your household. You’ll want to start by including all forms of income; next, list all recurring bills, debt payments, and other expenses that occur daily. Be sure to include any additional debts, long-term obligations, or miscellaneous expenses such as entertainment costs or vehicle maintenance. Once compiled, use this information to find the areas where you can save more money or pay down existing debt faster.
Once you understand your current financial situation, it’s time to make a plan for reaching your long-term financial goals. Before meeting with a credit counselor, take the time to review and reflect on what you would like to accomplish soon and in the future. As an example, do you need help resolving a dispute or negotiating an affordable payment plan for debt? Maybe you want someone to help you set up a budget or savings plan. Having target goals in mind will provide the credit counseling team with valuable information about how they can design their structure of debt maintenance for you.
After discussing your goals with your credit counselor, they will be able to do the research necessary to tailor an action plan that works for you. This plan often includes education about different types of loans, savings and budgeting advice, as well as other debt management services such as dispute resolution and lump-sum payment plans. Your credit counselor will provide step-by-step instructions on how to tackle each goal until it is achieved. An action plan can help keep you on track and provide motivation throughout your debt-payoff journey.
