How Does Consumer Credit Counseling Work?

Consumer Credit Counseling Services (CCCS) offers financial education, budgeting assistance, and Debt Management Plans (DMP) through their network of counseling offices. All CCCS agencies are 501(c)(3) nonprofits.

History of Consumer Credit Counseling Services

The National Foundation for Consumer Credit (NFCC) was founded in 1951 when credit cards were still a new financial product. The NFCC was founded to promote awareness and education of credit and financial literacy.

At the time, credit counseling agencies were largely independent, though most maintained membership to the NFCC. This gave them access to counselor certification, educational materials, and a point of unified negotiation with creditors.

Programs Offered

CCCS agencies offer a variety of services and programs to help consumers manage their debt. To begin with, they offer a free consultation – usually referred to as a credit counseling or debt and budget counseling session – lasting anywhere from 45 to 90 minutes, to review your current financial situation and determine the best method to help.

During this session you’ll receive feedback on how to improve your finances. These sessions can include, but are not limited to, a free review of your credit reports, free budgeting help, an action plan for your next steps, and referrals to tools and resources. Many CCCS agencies also offer education materials and workshops.

At the close of your session, a counselor will advise you on the next steps, which may or may not include a debt management plan (or DMP). If a DMP is the right choice for you, they will work to set up the program with your creditors. Your counselor will contact your creditors in an attempt to reduce your interest rates, remove fees, and create a monthly payment plan you can work with. All of your debts will be combined into one monthly payment that will be made to the counseling agency and they will then pay each of your creditors. Credit counseling agencies may also offer specialized counseling for a variety of issues, including:

Connect with your credit counseling agency of choice to see what programs and services they offer.

How CCCS is Funded

Most nonprofit credit counseling agencies are funded through a combination of grants and consumer fees.

The largest source of grants is usually government agencies and programs, which often provide funds for specific counseling services. (For example, foreclosure counseling is often provided at no charge thanks to government initiatives that aim to keep families and individuals in their homes.) Credit card companies and other large financial institutions may also provide grants to nonprofits that provide financial education services to consumers.

While most counseling services are free, some may charge a fee – particularly in cases where grants and other outside funds aren’t available.

There are also usually fees associated with the debt management plan. These fees will vary depending on the circumstances of the consumer, but must be affordable and fit comfortably within the consumer’s budget. Typically, fee reductions and waivers may be available if necessary.

Consumer Credit Counseling is a good option for anyone trying to manage their debt. Even if you don’t choose a DMP, you will find the education and resources you need to get out of debt for very little to no cost.

  • 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.
  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

  • 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.