What is credit counseling?
Credit counseling services can help consumers learn better financial habits, draft personalized budgets and set up debt management payment plans with creditors.
Because they both work with clients struggling with unsecured debt, credit counseling services are often confused with debt settlement companies, but there are major differences: Credit counseling companies are typically nonprofit and, unlike debt settlement agencies, they work to create a plan to pay your balance in full, not erase a portion of your debt.
Credit counseling organizations also offer free or low-cost classes and programs addressing topics like bankruptcy, homebuying, foreclosure and student loans.
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How does a credit counseling service work?
When you reach out to a service, you should be offered a free initial consultation with a credit counselor online, in person or over the phone. You’ll look at your total assets and debts, and hone in on the issues that led to your problem.
After your consultation, your credit counselor will recommend steps towards improving your financial situation.That might include enrolling in a debt management program (DMP), in which the service negotiates with your creditors to lower your interest rate, waive certain fees or make other concessions.
What is a debt management plan?
A credit counseling agency may offer a debt management plan (DMP) to help you pay off unsecured debts faster. You need to demonstrate a reliable income that can cover monthly payments, but there is no credit score requirement and no minimum debt amount.
Once you enroll, a credit counselor will negotiate with your creditors on your behalf to lower your interest rates, waive late fees or reduce your monthly payment. Unlike debt settlement, however, they don’t lower your principal balance.
If it’s approved, you’ll make monthly payments to the counseling service, which will pay your creditors on your behalf. There is typically an upfront enrollment fee and a monthly charge for each account in the plan.
Many credit counseling services claim to be able to lower elevated credit card interest rates down to 6% to 10%, making it much easier for a client to make headway on their total.
Because you’re not stopping payment, your credit score won’t take the same hit as it would with a debt settlement company. You are normally required to close any enrolled credit card accounts, however, which will bump up your credit utilization ratio.
Credit counseling services claim they can help consumers pay off debt within an average of three to five years.
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How much does credit counseling cost?
Your initial consultation should be free, but debt management plans usually include an upfront startup fee, which can range from $30 to $75, and a recurring monthly charge, which can be anywhere from $20 to $75.
Fees are regulated at the state level: In California, for example, the initial fee is limited to $50 and monthly charges are capped at 8% or $35, whichever is less. In Texas, setup fees are capped at $144, with monthly service fees limited to $14 per account or $72 total.
Best credit counseling services
We analyzed more than 20 consumer credit services to find the best options, considering factors such as variety of services, fees, reputation and consumer experience.
Money Management International
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Highlights
The largest nonprofit credit counseling organization in the U.S., MMI delivers both debt management and debt settlement plans, with online financial education tools and 30 branch offices.
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Minimum debt
$0 ($2,000 for debt settlement plans)
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Fees
Initial set-up fee ($33-$75) and ongoing monthly fee ($25-$69). Fees vary based on state and debt amount.
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Availability
Operates in all 50 U.S. states and Washington, D.C.
Pros
- Offer credit counseling and debt relief.
- Debt management plans available nationwide.
- High success rate in reducing interest rates.
- A+ rating from the Better Business Bureau and overwhelmingly positive reviews.
Cons
- Initial setup fee and monthly subscription.
- Debt relief programs not available in all states.
- Clients must close any enrolled credit cards.
GreenPath Financial Wellness
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Highlights
Founded in 1961, GreenPath offers free financial consultations, debt management plans and HUD-certified housing counselors.
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Minimum debt
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Fees
On average, clients are charged a one-time setup fee of $35 and a $31 monthly fee.
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Availability
All 50 U.S. states, Washington, D.C. and Puerto Rico
Pros
- More than six decades in the industry
- On average, saves clients $199 in monthly minimums and $29,700 in interest.
- Offers housing support
- Operates nationwide
Cons
- Not all creditors accept proposals for debt management plans.
- Clients must close any enrolled credit cards
Apprisen
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Highlights
Founded in 1955, Apprisen offers budgeting workshops, debt management plans, credit counseling, housing seminars and bankruptcy education in person and online. Clients can subscribe to the financial health platform Propel to gain on-demand access to certified financial coaches and exclusive budget tools.
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Minimum debt
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Fees
Vary by state but will never exceed $45 one-time setup fee and $45 monthly fee.
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Availability
Operates in all 50 U.S. states and Washington, D.C.
Pros
- Setup and monthly fees capped at $45 each.
- Operates nationwide
- First-time homebuyer guidance.
Cons
- Clients must close any enrolled credit cards.
- Doesn’t settle debts for less than the outstanding principal.
InCharge Debt Solutions
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Highlights
In addition to positive user reviews and accreditation by the National Foundation for Credit Counseling, InCharge holds an A+ rating from the Better Business Bureau and is approved by the U.S. Department of Housing and Urban Development (HUD) to provide housing counseling.
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Minimum debt
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Fees
Average setup fee is $52 and monthly fee is $34, though rates can vary by state
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Availability
Operates in all 50 U.S. states and Washington, D.C.
Pros
- Reports clients save between $75 and $300 per month.
- Gets credit card interest rates down to an average of 8%.
- Overwhelmingly positive feedback on Trustpilot.
Cons
- Specializes in credit card debt.
- No mobile app.
American Consumer Credit Counseling
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Highlights
In business since 1991, ACCC offers debt management plans, financial education, bankruptcy counseling and other services. According to the company, clients collectively paid off $248 million in 2025 alone.
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Minimum debt
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Fees
One-time $39 enrollment fee and $7 monthly maintenance charge per enrolled account ($70 maximum)
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Availability
All 50 U.S. states and Washington, D.C.
Pros
- Offers guidance on student loan debt, retirement, ID theft, budgeting and more
- Has counsellors who specialize in military personnel.
- CreditU mobile app features budgeting tools and lets you track your debt.
Cons
- Monthly fee charged per account, can reach $70
- Not all creditors accept proposals for debt management plans.
- Clients must close any enrolled credit cards
How to choose a credit counseling service
A good credit counseling agency will help you understand your options, not pressure you into choosing a particular strategy. Get as much information as you can before making a decision.
1. Look for nonprofits
Many reputable credit counseling organizations are nonprofits. That doesn’t guarantee that an agency is legitimate or that its services are free, but nonprofits generally focus more on financial education than on making money on debt resolution.
2. Review the available services
A good credit counseling agency should offer more services than just debt management plans, such as budgeting advice, debt counseling, foreclosure and bankruptcy education and homebuyer education. Look for an agency that offers a free initial consultation with a certified counselor. Get a clear explanation of its services, fees and recommendations before you sign up for anything.
3. Consider its reputation
Look for an agency that is accredited by the Council on Accreditation, which reviews community-based social services. It should also maintain a membership in established industry organizations, such as the National Foundation for Credit Counseling or Financial Counseling Association of America.
You can also check the agency’s Better Business Bureau rating and consumer reviews and search for any history of judgments or complaints with the Consumer Financial Protection Bureau, your state attorney general or local consumer protection agency.
4. Compare fees
If you’re considering a debt management plan, ask for a written breakdown of all costs, including any enrollment or startup fee and monthly charges. Consider how long you expect to be in the program so you can estimate the total cost.
Avoid agencies that aren’t transparent about their fees or that pressure you to enroll immediately. You should be able to ask how counselors are paid — avoid agencies where compensation is commission-based.
5. Ask which creditors the agency works with
If you’re considering a debt management plan, don’t assume that every creditor will participate. Ask whether the agency works with your creditors and whether your creditors have typically accepted its plans. You should confirm with your creditors that they’ve accepted the terms before you begin making payments through the plan
Credit counseling pros and cons
While a credit counseling service can help tackle high-interest debt, it’s not the right solution for everyone
Pros
- Can usually get a free initial consultation.
- A debt repayment plan can result in lower interest rates and fees.
- Usually simplifies bills into one monthly payment to the counseling agency.
- Limited impact on your credit score.
Cons
- Doesn’t reduce your principal.
- Plans usually have startup and monthly fees.
- Only available for unsecured debts.
- Usually requires you to close your credit cards.
- Repayment usually takes an average of three to five years.
- Creditors don’t have to accept a debt management plan.
Credit counseling or debt settlement?
Debt settlement companies and credit counseling services both help clients carrying large, high-interest debts, but there are significant differences.
Requirements
Only unsecured debt, like credit card bills or medical expenses, can be enrolled in either a debt management or a debt settlement plan. If you have secured debt, like a mortgage or car loan, it won’t be eligible for either. Debt settlement programs usually require a minimum balance of either $7,500 or $10,000, but there is no strict minimum for debt management with a credit counseling agency.
Costs
Debt management plans typically have startup and monthly fees, while debt settlement companies charge a fee based on the amount of debt enrolled.
For example, if you enroll $10,000 in credit card bills in a DMP that takes five years to complete, you might pay a $45 enrollment fee and a $45 monthly account fee. Over five years, you would pay $2,745, not including the payments made to your creditors.
Now, assume you enroll that same $10,000 in a settlement program that takes four years to complete and charges a 25% fee, a one-time $10 setup fee for the dedicated bank account used to pay your creditors and a monthly account maintenance fee of $10. If the company successfully negotiates your debt down, your settlement fee would be $2,500, plus $490 in account fees — bringing the total fees to $2,990.
Debt settlement companies can lower your principal, sometimes by as much as 50%. Credit counseling agencies may lower your interest rate or waive certain fees, but they can’t shrink the original balance. At the same time, debt that is forgiven through a settlement plan is usually considered taxable income.
Consequences
Enrolling in a debt management plan on its own won’t hurt your credit, although closing those credit accounts will increase your credit utilization rate. Creditors may also add a note on your credit report that you are in a program. It won’t hurt your score, but future lenders might see it.
Debt settlement can have a major negative impact on your credit score — as much as 100 points. That’s because companies usually require you to let your accounts fall into delinquency, which is a major hit to your payment history. If negotiations take months, creditors may eventually label your account as a severe loss, or charge off, which remains on your report for seven years.
As with debt management, there is a notation to other lenders that you did not fulfill your original obligation.
Which is better?
Credit counseling may make more sense if you have a reliable income and are making at least minimum payments on your credit cards and other bills, but need help chipping away at your principal.
Debt settlement is a more drastic option, but it could be the better choice if you’re unable to make minimum payments or have already defaulted.
FAQs
Does credit counseling hurt your credit?
An initial consultation with a credit counseling service may entail a soft inquiry that won’t impact your credit score. However, enrolling in aDMP means closing accounts, which can temporarily increase your credit utilization ratio and lower your score. If you complete the plan, however, you could see significant long-term improvements to your credit.
Is credit counseling a good idea?
Credit counseling can be a good idea if you feel overwhelmed about paying off your debts. You may also benefit if you plan to start a business or take out a mortgage, or if you’re facing an unexpected life event, like a job loss. It can help you consolidate bills, pay off debts faster, and learn long-term habits for a better financial future.
How much does credit counseling cost?
Most credit counseling services offer free consultations. If you enroll in a Debt Management Plan, however, there is usually a startup fee and monthly charges. Startup fees can range from $30 to $75, while the monthly charge may be anywhere from $20 to $75.
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