Credit Counseling

A Credit Counseling Agency is a non-profit organization set up to counsel consumers on matters of money management, credit and debt resolution. Counselors working at these non-profit organizations look at your financial situation and give recommendations on how to return to a financially healthy status.


  • A good credit counselor may be able to give you an action plan based upon your particular income, expenses and situation that addresses the cause of your financial problem and focuses on better budgeting.
  • Many agencies offer budgeting and money management classes at no or little cost. Some agencies offer information to educate you on buying your first home.


  • All credit counseling agencies are not the same and some attempt to sign you up for a consolidation loan that may not be in your best interest.
  • Instead of finding a solution that fits your needs, some agencies pressure people to sign up for debt management plans.
  • Some agencies charge excessive fees or fail to disclose their fees.

What to Avoid

  • Avoid any agency that does not look at your full financial picture, or tries to push you into a plan of action that does not seem right for you.
  • Avoid signing any contract you do not understand or that does not sound reasonable and helpful to you.
  • Avoid any agency that is aggressively trying to sell you something or that uses counselors reading from a script.
  • Avoid any agency that doesn’t offer a variety of options such as budgeting classes or budget counseling sessions.
  • Avoid agencies with complaints on file with the consumer protection department of the Attorney General’s office in your state.

What to Look for

  • Look for an agency that offers a variety of services and educational opportunities. The counselor should be looking at your full financial picture and not pressuring you into a plan or service they provide.

Potential Impact on Your Credit

Simply seeking guidance or financial education from a credit counseling agency will not be reflected on your credit reports. However, taking part in a Debt Management Plan (DMP) will be shown on your credit reports. During a DMP, creditors may report to the Credit Reporting Agencies that their debt is not being paid as originally agreed or that the consumer is taking part in a DMP.