Credit Counseling — In Your Jammies?

In working in the capacity of financial educators, many of us at Cambridge conduct a fair amount of research. At times, we will find information is particularly useful to the public.  Other times, we come across information that’s accurate to a point; however, requires clarification.  Unfortunately, we will sometimes come across articles that are completely misleading — which is the case regarding an article which was forwarded to me by our president this week.

As I read over the article entitled “Recession Resistant Business Ideas: Credit Counseling Service”, I could not help by think of the line from the Princess Bride uttered by Inigo Montoya – “You keep using that word. I do not think it means what you think it means.” The article appears to talk about establishing a for-profit credit counseling service out of your home; however, it more so comes across a tutorial for becoming a personal finance coach.

My first concern with the article are the understated qualifications one needs to become a credit counselor.  The services provided by credit counseling agencies are far beyond simply helping people establish a workable budget.  Certified credit counselors completely analyze someone’s situation and make meaningful recommendations to alleviate financial burdens.  Sometimes, these recommendations involve referrals to mental health professionals and a host of other social services as they may be necessary to aid the individual.  This is why it’s very important for consumers to deal with a certified credit counselor – a professional who has received training from accredited associations to practice his or her craft.

As mentioned, agencies such as Cambridge are able to assist many individuals by helping them to establish budgets; however, counselors must posses a compendium of financial knowledge. Such knowledge helps a counselor assess if someone can successfully rehabilitate his or her own finances or require the structure of a debt management plan.  Nowhere does the article mention the provision of such a plan, which is synonymous with providing the service of credit counseling.   Although only a small percentage of the individuals contacting Cambridge require such assistance, it is a valuable component of the credit counseling experience.

Furthermore, the article portrays establishing a credit counseling service is as easy as plopping down a hundred bucks and having an operational phone line.   If you practice as a credit counseling agency you will be governed by the laws applicable to the states in which you conduct business. Each state will establish what types of fees, licensing and bonds a credit counseling agency must maintain. This is where I suspect my problem with the term “credit counseling” begins. Should an individual establish themselves under the moniker of “credit counseling” he or she will become subject to a plethora of regulation.

When searching for a credit counseling agency, we recommend working with a nonprofit agency – preferably one that maintains membership with a national association such as the Association of Independent Consumer Credit Counseling Agencies (AICCCA).  Such agencies adhere to rigorous standards and ethics to ensure the public receives quality advice and service.   Settling for less could negatively impact someone’s plan to regain control of their finances.

For more information, or to speak with a certified credit counselor please contact Cambridge Credit Counseling at 800-897-2200 or


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