Most commonly asked questions about credit counseling

A reader recently asked, “How much debt do you have to have to get into credit counseling?” That’s a great question, and reflective of the fact that there’s a lot of confusion out there over what credit counseling is and who needs it.

Let’s dispel some of that confusion right now by answering a few of the most commonly asked questions about credit counseling.

Who qualifies for credit counseling?

Everyone. Literally everyone. Credit counseling, also known as debt and budget counseling, is a free service available to anyone who wants to take part. Many of the individuals who take part in a credit counseling session are dealing with unmanageable debt, but having debt isn’t a prerequisite.

What happens during a credit counseling session?

Credit counseling is a discussion of your financial situation, coupled with expert guidance and advice designed to help you solve problems and reach goals. Basically, your counselor will map your income and expenses, creating a budget based on how you spend your money. They’ll also pull a copy of your credit report and review the status of your current debts.

With that information as a framework, together you’ll discuss your financial goals. What changes would you like to see? What do you feel is holding you back?

Understanding your goals and your present situation, your counselor will then provide you with an action plan, which will include suggested steps you may take in order to reach your goals.

One of those suggested steps may be a debt management plan or DMP. A DMP is a creditor-negotiated repayment plan designed to fit your financial capacity and repay eligible debts within a set period of time (usually five years). If you decide that a DMP is right for you, there may be fees involved. Completing a credit counseling session does not obligate you to begin a DMP.

What do I need to bring to my credit counseling session?

You’re not required to bring anything, but it’s very helpful to have copies of your most recent bills and bank statements available. This will help your counselor get a more accurate understanding of your finances.

Who will know that I spoke with a credit counselor?

No one. Not unless you want to tell them. Counseling sessions are confidential. Your creditors will not be informed that you spoke with a credit counselor. Neither will your employer or family members. We take client confidentiality very seriously.

Will it hurt my credit score?

Speaking with a credit counselor will not impact your credit score or be reported in any way on your credit report.

If you decide to enroll in a debt management plan, however, creditors may choose to add a notation to those debts on your credit report. This notation will not impact the calculation of your credit score.

How do I speak with a credit counselor?

At MMI, our credit counselors are available 24 hours a day, every day, by calling 866.889.9347. We also have counselors working out of over 70 branch locations across the country if you’re interested in a face-to-face session. Additionally, you can also begin a counseling session online and interact with a counselor via chat.

You don’t need to be in financial distress in order to benefit from speaking with a credit counselor. If you’re simply dissatisfied with the amount of money left over at the end of the month and don’t know where to begin making improvements, speaking with an experienced counselor can help.

Everyone, at every point in their life, can benefit from a little expert advice. If you don’t feel confident in how you’re managing your money, consider speaking with a counselor today.

Jesse Campbell is the Content Manager at MMI, focused on creating and delivering valuable educational materials that help families through everyday and extraordinary financial challenges.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.