What Are Credit Advisors and What Do They Do?

Credit advisors offer guidance on how to manage your money. Depending on your situation or goals, they can help you make a better budget, get out of debt, or improve your credit. Credit counselors have the experience and knowledge to provide you with advice to help you meet your financial goals.

Read on for an in-depth look at how credit counseling services work, how much it costs, and where to find credit assistance.

What are Credit Advisors?

Nonprofit organizations typically offer credit counselor services to help clients manage their finances. Debt counselors or credit advisors are certified and have the knowledge to help you make a budget, review your credit reports, pay off your debt, and enroll you in a debt management plan.

Credit advisor can also help you uncover the root cause of your financial difficulties and find ways to overcome them.

What Is It Like To Work With a Credit Advisor?

Financial counseling services vary from agency to agency. Typically, the process starts with a free credit counseling session during which your credit consultant will ask questions about your employment status, income, budget, expenses, and debt.

Your debt counselor will take the time to learn more about your financial situation and determine the type of support and credit advice you’ll need to achieve your goals. Additional help may be provided in the form of debt management plans (DMPs), workshops, learning materials, budgeting help, or follow-up sessions.

Credit Advisor Services

Credit advisors may specialize in different areas, and agencies may offer a number of credit professional services. Some of the most common services a credit advisor can provide are:

• Credit advisors can help you make a realistic budget based on your goals, income, expenses, and debt.
• They can help you improve your credit scores.
• If you have a lot of unsecured debt, such as credit cards and personal loans, they can enroll you in a debt management plan (DMP) to help you become debt-free in three to five years. They can act as a debt negotiator and work with your creditors to waive fees and reduce interest rates.
• They can provide pre-bankruptcy and debtor education courses if you file for bankruptcy.
• Credit counselors can also offer homeownership-related services and assistance, such as foreclosure avoidance, reverse mortgage counseling, and first-time homebuyer assistance.
• Your credit advisor can help you with free financial education courses, webinars, guides, and educational materials.
• They can help you understand your options when it comes to student loans, such as income-driven repayment plans, student loan forgiveness, deferment, and forbearance.

How Much Does It Cost To Hire a Credit Advisor?

Nonprofit credit counseling agencies usually offer educational resources, workshops, and consultation services free or at a very low cost. However, if you enroll in a debt management plan, you’ll have to pay an initial setup fee and a monthly fee.

Fees vary based on the state where the agency operates. Typically, the initial setup fee is up to $79, and the monthly fee can be up to $50.

Pros and Cons of Hiring a Credit Advisor

Credit advisors can help you get a handle on your finances and debt at a low cost, but it may not be for everyone. Consider these pros and cons before you sign up.

Pros 

• Free or low-cost services to help you manage your money.
• Advice on how to pay off your debt.
• They may be able to get your interest rates lowered or your fees waived.
• You may be able to become debt-free within five years.

Cons

• You may not get as much reduction in your debt compared to other options like debt settlement.
• You’ll need to close your accounts if you enroll in a DMP.
• You may lose the benefits if you miss a payment on your DMP.
• A note will be added to your credit report indicating that you’re in a DMP.

Where To Find Credit Advisors

Here are the three main resources for finding certified credit advisors:

• Financial Counseling Association of America (FCAA)
• National Foundation for Credit Counseling (NFCC)
• The U.S. Department of Justice’s list of approved credit counselors

You may also want to start with our recommendations for the top three credit counseling agencies based on factors like geographic availability, services offered, fees, and customer reviews.

Choosing the Best Credit Advisor

When choosing a credit advisor, it’s important to make sure that they’re transparent, certified, and offer the services you’re looking for. Here are a few more factors you should keep in mind when comparing credit advisors.

Assessing Credentials and Experience

Check to make sure your credit advisor is certified and has the experience needed to provide you with reliable advice. Organizations like the Financial Counseling Association of America and the National Foundation for Credit Counseling provide a list of credit counseling agencies that meet their standards.

Ask questions about their past experience helping clients with problems that are similar to yours.

Evaluating Services Offered

Not all credit advisors offer the same services. Some may be better suited for you compared to others based on the areas of money management they specialize in.

Typical areas of specialization include financial planning, budgeting assistance, debt management, and credit repair. Knowing this can help you narrow down your options and choose the right credit advisor for your needs.

Reading Reviews and Testimonials

It’s also important to read the reviews of the credit counselor or agency on websites like Trustpilot, Google, and the Better Business Bureau to better understand their reputation.

Read testimonials from past clients to see if the credit advisor was able to resolve their problems and provide effective advice.

Carefully Compare Your Options To Find the Best Credit Advisor

If you’re living paycheck to paycheck, can’t manage your debt, or just need a little help managing your finances, you may want to speak to a credit advisor. Consumer credit counseling services are usually offered by nonprofit organizations.

Your credit advisor can take an in-depth look at your financial situation and help you make a plan to improve your credit, pay off debt, and manage your finances better. However, you may want to consider other debt relief strategies that may work better for your situation, such as debt consolidation or debt settlement.