Credit counseling services help consumers deal with overwhelming debt and get their finances back on track. You’ll meet with a credit counselor and they’ll assess your financial situation to help you come up with a plan to better manage your finances and get your debt under control.

There are many reputable credit counseling agencies to choose from. But not all are worth your time and some are scammers looking to prey on innocent consumers. So, it’s vital that you do your homework to ensure the agencies you’re considering are legitimate options.

The importance of picking one of the best credit counseling services

The best credit counseling services exist to assist consumers struggling to manage debts. Still, some charge hefty fees despite advertising their “nonprofit” status to the public. Others encourage consumers to stop paying creditors and make monthly payments to a dedicated account, which can lead to adverse credit reporting and an even bigger debt load. Some agencies aren’t legitimate and operate illegally with the intention of scamming consumers.

Ultimately, credit counseling services should be a last resort once you’ve exhausted all your other options. If you decide to move forward, do your due diligence to ensure you select a reputable option.

The best credit counseling services

When you’re ready to start exploring your options, the following credit counseling companies are worth considering:

1. Cambridge Credit Counseling Corp.

Cambridge Credit Counseling Corp was established in 1996 and is BBB-accredited with an A+ rating. It currently operates as a 501(c)(3) and the team of nationally certified credit and housing counselors offer credit counseling, debt management plans, bankruptcy counseling, student loan counseling, reverse mortgage counseling, housing counseling and free financial literacy resources. If you enroll in a debt management plan, the fees are some of the lowest in the industry – the average client pays just $40 to get started and $30 per month until the plan is complete.

2. GreenPath Financial Wellness

With over 60 years of experience, GreenPath Financial Wellness is a BBB-accredited nonprofit that helps consumers resolve overwhelming debt. Services include financial counseling, credit counseling, debt counseling, debt management plans, student loan counseling, homebuyer counseling, reverse mortgage counseling, and foreclosure prevention and support services. GreenPath operates in all 50 states with offices nationwide, and its licensed counselors are available by phone 7 days a week to assist. You’ll also find that the set-up and monthly fees for debt management plans are reasonable – between $0 and $50 to get started and $0 to $75 per month.

3. InCharge Debt Solutions

InCharge Debt Solutions has helped over $3 million consumers pay off $3 billion in debt since its inception in 1997. Also operating as a 501(c)(3) nonprofit, it features credit counseling, debt management, debt consolidation and credit card debt forgiveness programs to help you get back on track. Bankruptcy counseling is also available, along with HUD-certified housing counseling, foreclosure prevention counseling and eviction prevention assistance. You can receive the help you need by phone, via the mobile app or at the physical location in Orlando, Florida.

4. Consolidated Credit

Founded in 1993, Consolidated Credit is a 501(c)(3) nonprofit credit counseling agency accredited by the BBB and the ANSI National Accreditation Board. The team of experienced credit counselors has helped over 10.2 million consumers consolidate over $9.75 billion in debt to date. You can reach out to Consolidated Credit for debt relief services, housing counseling (delivered by HUD-certified counselors), educational resources for members of the armed forces or access financial education tools online free of charge. The agency also provides over 300 hours of live education annually.

Things to try before you look into credit counseling

Consider these alternatives before working with a credit counseling service to get the relief you need:

  • Reach out to your lenders or creditors. Communicate that you’re facing financial hardship and ask if they offer payment arrangements. You may be eligible for a short-term modified payment plan with lower monthly payments that work for your budget.
  • Negotiate a settlement. Debt settlement involves paying less than what’s owed to satisfy a debt. You can contact your lenders or creditors directly to request a settlement, but be sure to only offer an amount you can afford to pay in a lump sum. Or you can use a debt settlement company to do the legwork for you. They’ll require that you make monthly payments into a dedicated account until you have enough to make a settlement offer. Furthermore, you’ll pay a fee for their services – usually a percentage of the settlement amount. Also, remember that your credit score will likely take a big hit whether you settle the debt on your own or by using a company.

How to protect yourself if you use a credit counseling service

If you decide to use a credit counseling service, there are actions you can take to protect your finances. It starts with doing your research to ensure the company you’re considering is legitimate. The Federal Trade Commission (FTC) suggests that you inquire about its licensure status, the qualifications of its counselors and services offered.

You should also ask about the fee structure and what measures they employ to ensure your information remains secure and out of the hands of fraudsters. It’s also important to ask how they compensate employees. If it’s on a commission basis or if the counselors can earn more if you sign up for certain services, that’s your sign to move on.

Bottom line

Credit counseling services can lend a helping hand if you’re overwhelmed with your finances. However, not all companies offering to provide services can be trusted. Many scammers exist to take advantage of consumers, so it’s best to do your own research to ensure the options you’re considering are reputable.

The credit counseling agency you select should be a nonprofit organization that is BBB-accredited and licensed to do business in your state. It’s also vital that the agency’s counselors are trained, certified and experienced. Most importantly, you want to understand the fee schedule, so you’ll know what you’re getting into and take the necessary steps to protect yourself should you decide to move forward.