Credit Counseling Frequently Asked Questions (FAQs)
What Does Credit Counseling Cost?
InCharge offers credit counseling with a certified credit counselor, free of charge. During your counseling session, you’ll be provided with the following at no charge:
- A portion of your credit report listing your current credit card accounts, balances, and minimum monthly payments for each.
- A counseled budget including personalized recommendations on how to save money in each major budget category
- An action plan providing you with a recommended debt solution, as well as alternate debt solutions available to you
During your credit counseling session and after, you can choose the debt solution recommended by InCharge, or not. The choice is yours.
If you qualify for and decide to enroll in the InCharge debt management program, there is an average set-up fee of $40, and an average $25 monthly fee, not to exceed $75 and $55, respectively. Learn more about debt management program fees.
Who Is Eligible For Credit Counseling?
There are no eligibility requirements for credit counseling. Anyone in need of debt relief is eligible.
Can I Do Credit Counseling Online?
Absolutely. InCharge is proud to offer an online credit counseling option where you enter your information and receive a personalized debt relief solution without ever having to speak to a person. If a debt management program is recommended, you can add or delete credit accounts, choose a payment due date and set-up automated payments, all without having to call in to a counselor.
How Much Debt Do I Need For the Debt Management Program?
We do not have a minimum debt requirement for the debt management program. Our goal is to create a payment plan that is affordable and enables you to pay off your debt within a three to five year period. Our clients have, on average, credit card debt of $15,000. Though we have enrolled clients with as little as $1000 in debt, and more than $100,000 in debt. Our clients have an average annual income of $36,000.
Will Credit Counseling Ruin My Credit Score?
Participating in a credit counseling session will not be reflected on your credit report and it will not impact your credit score. However, changes in your financial behavior, especially after choosing a debt solution, may have a positive or negative impact on your score. For example, joining a debt management program and having your credit cards closed may initially lower your score. But making on-time payments you can afford over time, could raise your score. A study published by the National Foundation for Credit Counseling found that participants saw a 50 point average increase in their credit scores, 18 months after receiving credit counseling. This gain applied to those in the bottom quartile of credit score.
Read Will Credit Counseling Ruin My Credit Score for a better understanding of how credit scores are calculated.
What Does A Credit Counselor Do?
If you choose credit counseling over the telephone, we’ll connect you with a certified credit counselor who will do the following: collect information about your income, assets and expenses. They will then pull a copy of your credit report and review your debts with you. Based on your income, assets and debts, your credit counselor will make a debt relief recommendation to you which may include bankruptcy, a debt management program and/or recommendations for how to reduce items in your budget to help you pay off your debt faster.
Read more about what happens during a credit counseling session.
How Long Does Credit Counseling Take?
NFCC-certified financial counselors conduct 20-40 minute interviews to gather information about a person’s financial situation and provide a personalized debt relief solution.
How Can You Offer Free Credit Counseling?
In 2015, InCharge Debt Solutions delivered over 90,000 free credit counseling sessions. That’s a lot of free financial guidance. How do we pay for it? We receive funding from a number of our other nonprofit programs that help pay for the certified credit counseling we’re able to offer, absolutely free, to anyone who calls, nationwide.
Are Debt Counselors Certified?
Our debt counselors must complete intensive financial counseling and become certified by the NFCC. Besides being certified, many of InCharge’s credit counselors have over 10 years of experience as a financial counselor. They’ve helped people through every kind of financial downturn, from losing a loved one to catastrophic illness, to job loss. They can help you too.
Is There An App for Credit Counseling?
InCharge created an app for credit counseling called the Debt Solution Finder App. This credit counseling app is available for both Android and iPhones.
Download the Credit Counseling App: Debt Solution Finder
Five Advantages To Working With A Consumer Credit Counseling Company
- Impartial financial advice from a nonprofit organization not trying to sell you anything
- Financial counselors are trained and experienced
- Nonprofit credit counseling is offered 100% free of charge
- You may qualify for a debt management program that could lower your interest rates and reduce fees.
- Budget counseling gives you tips and advice you can use today to reduce your expenses
Fast Facts about Nonprofit Credit Counseling and Debt Counseling Services
Certified credit counselors are trained in the following: budgeting; credit; collections and debt management; consumer rights and responsibilities and bankruptcy.
Financial and personal information offered by clients is confidential. Meeting with a counselor, and identifying a debt solution, won’t impact your credit score.
How To Choose A Credit Counseling Company?
The Federal Trade Commission recommends contacting non-profit credit counseling companies, like InCharge Debt Solutions, for in-person, over-the-phone or online credit counseling. Most non-profit credit counseling agencies like InCharge offer credit counseling for free.
The FTC website warns that non-profit status does not guarantee the services are free and suggests careful research before choosing a credit counseling company.
Take time to do research before choosing a credit counseling agency.
Five Characteristics of a Reputable Credit Counseling Company
- Nonprofit: Choose a nonprofit credit counseling agency like Incharge – that is a member of the NFCC, the National Foundation for Credit Counseling.
- Licensed and Accredited: Make sure the agency is licensed and accredited. The National Foundation for Credit Counseling (NFCC) requires member organizations to adhere to strict standards and regular audits for data security, counselor accreditation and results-oriented customer service.
- COA-Certified: Be sure the organization is certified by Council on Accreditation before signing up for their program. Be certain the counselors are certified, preferably by the NFCC.
- Low Complaints: Contact the state attorney general or Better Business Bureau for records of complaints and how the agency responded to complaints.
- Free Education: Choose an agency that provides free financial literacy education to clients and the general public.
For-Profit vs. Non-Profit Credit Counseling Services
The NFCC, which certifies credit counselors has approved 83 non-profit agencies. No for-profit companies are accredited by the NFCC.
“We pride ourselves on the fact that 100 percent of the money that consumers send our approved agencies, goes to the creditors,” Pam Carter, the senior director of membership at the NFCC, said. “We don’t hold anything back. That’s not always the case with the for-profit agencies.”
Credit counselors at nonprofit credit counseling agencies operate under strict state and organizational guidelines designed to insure they act in their client’s best interests. Non-profits are frequently audited by states to insure they comply with all of that state’s regulations. Non-profit credit counseling companies must demonstrate that they are acting in the best interests of all of their clients. For example, InCharge offers clients monthly newsletters with money-saving tips and stories of people who have gotten out of debt to help motivate clients to do the same.
Does Consumer Credit Counseling Work?
A recent credit counseling study has produced significant research findings for the debt relief industry, showing that credit counseling is effective in helping people pay off more debt and faster. Researchers at Ohio State University compared two groups of financially distressed people with similar characteristics. The first group received credit counseling and the second did not. Those who received credit counseling reduced their credit card debt by nearly $6,000 within 18 months of counseling. Those who had not received counseling, reduced their debt by only $3,600. Additionally, counseled participants’ available credit ratio was 19% higher than non-counseled available credit. Download the NFCC OSU Credit Counseling Statistics Final Report – 2016.
Data Highlights: Credit Counseling Improves Financial Habits and Confidence
The credit counseling study also tracked people’s feelings about their own financial situation. Three months after receiving credit counseling, surveys reported the following results:
- 67 percent said that credit counseling helped them better manage their money
- 68 percent said it helped them set financial goals.
- 70 percent said it improved their financial confidence
- 73 percent said they are paying their debt more consistently.
Credit counseling works because it provides people with the time and tools to focus on their financial situation. Nonprofit credit counseling provides a holistic, high-level view of an individual or family’s debts, assets, income and expenses before recommending a debt relief strategy. Credit counseling services work because the solutions provided are personalized and specific, and because counselors are well-trained and non-biased.
Additionally, credit counseling helps consumers consolidate debts into one monthly payment, reducing missed and late payments.