In my experience, I concur with David Bach's assessment that credit counseling does not work effectively through non-profit organizations. Not all problems are actually credit problems. 6 years ago, I found out from the PHFA housing program that I was broke. To me, this came as a complete surprise. The agency said I had too many expenses for my income. Namely, the issue was my student loan DEBT. At the time, I owed just over $74,600 of student loan DEBT in a deferred student loan payment plan. According to the PHFA mortgage underwriting criteria $746 or 1% of my loan is factored into the DEBT to Income calculation. I said to the loan officer, "But I am not paying the loan. I'm in an IDR program". The loan officer stated "But you are responsible for the loan."
According to Britannica, https://www.britannica.com/money/unbanked-and-underbanked , Underbanked means "a person maintains an FDIC-insured checking or savings account but regularly uses alternative financial services such as payday lending. People who are underbanked may be obligated to frequently use costly financial services like check cashing, payday lending, and money transfer services because they have limited access to better banking options." At that time, I was the definition of underbanked. I had a bank account but no access to loans, home equity, credit cards and other financial products.
My non-profit experience included Clarifi and Intercultural Family Services for credit counseling services but their focus was mainly on budgeting and assessing the "current" situation.
Like the rest of my life, finding out I had no money turned out to be a blessing in disguise. I didn't have money but I had a community of people who looked out for my children and I. Soon after the PFHA encounter, my family received a scholarship to attend private school from the Children's Scholarship Fund Philadelphia and funding to repair the roof from the city's Basic Systems Repair program. What ever money I had was used to pay the mortgage. The mortgage was considerable less than renting an apartment and transportation was provided by SEPTA. These 2 measures saved the family money on housing and transportation costs. I could survive but NOT thrive until I had a solution to the student loan DEBT conundrum.
When I have a problem, I become very vocal about it. I believe there is a solution to every problem so there is no need to hide in shame. As I was discussing the issue, one of my former clients provided a referral to her friend, Terri Couser. Terri had just recently launched her credit education business. I hired Terri a few months later and within 2 months, not only was my student loan problem solved but I began receiving credit offers. I went from being underbanked to bankable. Terri told me what I needed to hear and HOW I needed to hear the issue. The real issue, in addition to the student loan DEBT, was not credit related. The real issue is that my income did not cover expenses. What I needed was a stream of income on paper that could be traced. Credit counseling agencies do not take a holistic approach to financial problem solving. Why? Because the non-profits do not get paid to SOLVE problems. The person paying the bills of the non-profit organization is not the consumer. Businesses exist to solve problems.
In order to move the financial needle forward, I needed to SEE the problem not as a "credit" problem but the broader issue of a net-worth problem. Net-worth is the outcome of leveraged assets. My income on paper was too low to leverage the assets in my possession. Terri could not provide leverage in the form of credit until there was a traceable base of income. I needed that critical piece of knowledge in order to CHANGE from a situation from just being able to survive into a space where my family could thrive. The non-profit organizations addressed budgeting and credit but chose not to address the real issue of income.
Actually, I found 2 jobs, one job as a teacher with The School District of Philadelphia and another working overnight in a factory. I chose the factory job which paid considerably LESS than working as a teacher but that is a story for another day....