Some debtors might benefit from credit counselling services. But what are credit counselling services really like and where are the best providers?

This new post will dive into the details of credit counselling and help you decide if it is a good option for you. We’ll talk you through how to find the best credit counselling services.

What Are Credit Counselling Services?

A credit counselling service is a personalised service that helps individuals with financial matters. Often, a credit counselling service will focus on money management, budgeting and debt management.

A lot of people who choose to use a credit counselling service will do so when their debts have already spiralled out of control. They use these services as a final resort to avoid bankruptcy.

One way that credit counselling services can help debtors avoid bankruptcy is by negotiating on their behalf. For example, the credit counsellor may contact your creditors and ask for interest rates to be frozen or reduced so you can avoid applying for bankruptcy. 

Credit counselling provides professional help, but for many, it provides some degree of emotional support too. 

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Who Should Use Credit Counselling Services?

Although anyone in debt can use credit counselling services, most people who opt into these services have multiple debts or very large debts that they can’t seem to get under control.

That doesn’t mean you can’t use credit counselling if you have smaller debts and need budgeting guidance. 

How Are Credit Counsellors Certified?

There is no single course or certification that qualifies a credit counsellor to do their job. But anyone working in this capacity will have some type of recognised qualification in finance, loans, debt management and/or bankruptcy. 

To work in these jobs, they must abide by strict regulations and maintain the highest of standards.

Are Credit Counselling Services Free?

Some organisations can provide credit counselling services for free. In this regard, they are very similar to debt charities that offer free debt advice – and some charities also speak with your creditors on your behalf.

There are also credit counselling providers that charge fees for their help and time. Do not confuse not-for-profit with free; some not-for-profit debt counselling services will still charge you.

What Happens at a Credit Counselling Service Appointment?

When you attend a credit counselling service appointment, it will be expected that you come prepared. This means bringing along any information or correspondence about the debt. Moreover, you will need to bring information about the rest of your personal finances, including monthly expenditure.

You don’t have to come with a perfected budget as the service is designed to help you with this anyway, but doing some groundwork before you attend is appreciated and expected. 

Once in the meeting, the credit counsellor will discuss your personal situation and assess the situation with you. The content of the service will be 100% personalised to you and your needs.

The counsellor may then come up with a plan of action and possibly contingency plans. After the meeting, they will work on negotiating with creditors and putting the plans in place, which will be discussed at follow up meetings. 

Can I Have a Remote Credit Counselling Appointment?

Yes, many groups and organisations now offer credit counselling services online and over the phone. This was already the norm before COVID-19 because lots of debtors could travel to the service providers’ offices. 

Since, COVID-19 and lockdowns, more companies now offer remote credit counselling services. 

Do Credit Counselling Services Offer Debt Solutions?

You might have heard of the various ways to get out of debt, such as using Individual Voluntary Arrangements (IVAs) or Debt Relief Orders (DROs) etc. These are provided by insolvency practitioners and such professionals working at debt management companies.

A debt counselling service cannot provide these to you directly, but if these are the best course of action, they will refer you to those that can provide them.

This means they may pass you on to other companies (with your permission!). You are likely to have to pay for these additional services, and the debt counsellor may receive a fee for their recommendation – but not always!

Credit Counselling Services Vs Debt Charities

You might have noticed many similarities between debt charities and credit counselling services. They both can offer free personalised advice and speak with your creditors on your behalf, and they both might recommend debt solutions.

Moreover, in most cases, neither are able to provide debt solutions directly. However, the main difference is that debt charities don’t refer people to specific debt management companies (some might!). 

Yet, debt counselling providers are more likely to have strong partnerships with these commercial debt management businesses.

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For more help with your debts and finding the places to get support, tune in to MoneyNerd. We provide frequent content about the best organisations and services that really do get people out of debt.

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About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more
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