When providing financial counseling, a credit counselor goes over the client's finances and develops a realistic plan to cover all expenses and pay off debt, according to Business Insider. Qualifying clients may be offered a debt management program, which may involve lower interest rates and smaller payments.
Credit or financial counseling refers to the actual counseling session, although some people use it to refer to debt management plans, notes ReadyForZero. Debt management plans may only be offered to clients who are very far behind on their debts, and there are additional fees. Sometimes those fees are waived, according to Business Insider.
Financial counselors often help people simply by suggesting ways to cut unnecessary expenses and rearrange their budgets so that they are able to save and pay off debt, according to HowStuffWorks. They also often provide general credit and financial education, which lets consumers make more informed choices.
Credit counseling does require the consumer to be committed to the process for it to be successful, notes ReadyForZero. The consumer must have the discipline to follow the recommended budget, and he needs to be completely open with the counselor about his financial situation. It is important for consumers to find a trustworthy and reputable credit counseling company, according to the Federal Trade Commission. Some companies charge high or hidden fees or otherwise engage in practices that may harm the consumer.