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Finding Advice on Credit and Debt Management

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Buying a home or paying for a college education are big expenses, but they’re also important investments in your life. One of the best ways to pay for big expenditures is with the help of a loan, but before you take on debt, it’s essential to understand the terms of the loan and your ability to repay it.

“If a person plans to take on additional debt, it is smart to first confirm that their financial ducks are in a row,” says Gail Cunningham, vice president of membership and public relations for the Washington, D.C.-based National Foundation for Credit Counseling (NFCC).

If you’re trying to manage substantial amounts of debt, it’s even more critical to get financial advice that can steer you back on course.

Finding expert advice

Where should you turn for advice on how to use credit and loans wisely and pay off debt successfully? There are many free or inexpensive credit counselors dedicated to helping educate consumers about budgeting and planning. Counselors can help you understand how much you can afford to spend, where your money is going—whether you’re devoting an uncommonly large share of your income to housing, food or transportation costs, for example—and smart strategies for paying off debt.

The challenge is that there are also many groups that bill themselves as credit counselors but really aim to profit from your financial stress. The good news is that many counselors are genuinely devoted to helping you make wise choices. “It’s easy to find the good guys,” Cunningham says. “Before engaging with a credit counselor, consumers need to do their homework to ensure that they are working with a legitimate agency.”

Here are three steps you can take to identify a reliable credit counselor:

  1. The Federal Trade Commission (FTC) recommends that you verify the organization is a nonprofit. This isn’t a guarantee that the organization has your best interests at heart, but it’s a start.
  2. The FTC also suggests asking questions such as whether the counselors are accredited and whether they’re paid more if their clients select certain options, such as a debt-management program (DMP). Avoid commission-based agencies, as well as those who seem to funnel all clients toward DMPs.
  3. Look for a variety of services on the agency’s menu, including free options—budget education, for example, rather than a singular focus on DMPs and other services that cost money to use. All NFCC member agencies offer such counseling on topics ranging from planning a wedding on a budget to preventing a mortgage foreclosure. In most cases such counseling is free, and it’s typically not more than $20.

Getting help from people you know

Rather than turn immediately to a counseling agency, you may choose to turn to a friend or family member for help—an aunt who is an attorney, for example, or a family friend who is an accountant. These people can provide much of the same budgeting help as a credit counselor, Cunningham says. However, choose that family member or friend carefully. “Turning to a family member or friend is only a good idea if that person is financially stable and can offer solid advice. It’s probably better and less awkward to reach out to a reliable credit counseling agency for professional, unbiased help.”

If you’re considering taking on debt, or if you’ve already done so and are now unsure how to pay it off, you’d be wise to receive some smart professional counsel. After all, such advice is often free—just make sure it’s from a trustworthy source.


This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

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