Credit Counseling


DEFINITION of 'Credit Counseling'

Personalized counseling services that provide guidance and support for those who have gotten in over their heads financially. The objective of most credit counseling is to help the creditor avoid bankruptcy, as well as provide basic education on financial management. Many counseling services also negotiate with creditors on behalf of the borrower to reduce interest rates and late fees.

BREAKING DOWN 'Credit Counseling'

Bankruptcy law mandates that anyone filing for bankruptcy must first undergo credit counseling before being approved. Many counselors charge reasonable fees for their services, but the consumer counseling industry is fraught with misrepresentation and even fraud. As such, those who seek a credit counselor should avoid any company that charges large upfront fees or make unrealistic promises. In addition, legitimate credit counseling firms are affiliated with the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.

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  1. Do free credit reports affect your credit score?

    Free credit reports do not impact your credit score. Credit inquiries are divided into two categories: soft inquiries and ... Read Full Answer >>
  2. Does a free credit report show your credit score?

    The free credit reports available from the three credit reporting agencies do not include your credit score. Under the 2 ... Read Full Answer >>
  3. Is getting a free credit report safe?

    Getting a free credit report can be safe if you are careful about the particular website from which you get it. Credit reports ... Read Full Answer >>
  4. How accurate are free credit reports?

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