As a financial journalist for about 20 years, I can tell you that one of the best games in town for debt counseling is the National Foundation for Credit Counseling. (NFCC) The 55-year-old organization is a nonprofit that gives free, one-on-one counseling on credit and debt issues, including student loans, credit cards, housing related debt, outreach to creditors, as well as counseling on budgeting and setting up debt repayment plans.
New research from Ohio State University, however, finds that people who used the services of NFCC through their Sharpen Your Financial Focus initiative, launched in 2013 with Bank of America, Wells Fargo, and Chase, not only lowered their debt and raised their credit scores, but they also improved their financial behavior.
Eighteen months after the program, Sharpen participants:
- Achieved $17,000 average decrease in total debt
- An $8,000 average decrease in total revolving debt
- And a 50-point average increase in their credit score from baseline for those in the bottom 25th percentile of participant, all when compared to a comparison group of people who were not counseled.
After just three months of counseling:
- 67% say the program helped them better manage their money
- 68% say it helped them set financial goals
- 70% improved their overall financial confidence, and 73% are paying their debt more consistently.
“Working together with financial institutions who support financial education, the NFCC Sharpen Your Financial Focus initiative has positively changed American consumers’ knowledge and behaviors related to personal finance,†said Susan C. Keating, NFCC president and CEO. “The Ohio State University research team has provided the most compelling evidence that nonprofit financial education is a catalyst for specific changes that improve financial capability.â€
There are many offers out there for groups to help you manage your debt, and debt counseling is an industry ridden with scams. Be wary of offers for debt counseling for a fee, and consider starting your debt elimination plan with a free service from an organization with a long history of helping consumers.