For consumers who are seeking credit counseling or other financial advice or assistance, it can be challenging to find a reputable agency to work with. One way to improve your odds is to look for a seal of approval from one of the two main nonprofit organizations—the National Foundation for Credit Counseling (NFCC) and the Financial Counseling Association of American (FCAA). Both are organizations that hold member agencies to ethical standards.
Learn more about what the NFCC and the FCAA are all about, the services they offer, and how they can help guide you toward finding the right help to improve your financial situation.
What Is the National Foundation for Credit Counseling?
The National Foundation for Credit Counseling (NFCC) is the largest and oldest nonprofit organization for the financial counseling industry. Established in 1951, the NFCC provides a range of services for people seeking guidance and direct assistance on financial matters.
“We act as a matchmaker to help consumers find the right agency that meets their needs depending on the type of problems that they’re having,” said Bruce McClary, NFCC’s senior vice president of communications, in a phone interview with The Balance. In addition, the NFCC acts as a consumer advocate to improve financial education and services.
In order to be a member of the NFCC, an agency must be a 501(c)(3) nonprofit organization. “Consumers can know that if they see the NFCC stamp, this organization has not only complied with the NFCC’s ridgid 18 standards, but also has been independently reviewed by a third party accreditation service—an additional level of standards,” said McClary. All members must be accredited through the Council on Accreditation (COA) or receive ISO 9001 certification through Bureau Veritas, both of which are widely respected industrywide, McClary said.
Credit Counselor Accreditation
The NFCC also requires that individual counselors working at any of the member agencies achieve and maintain counselor certification through the NFCC. Counselors must pass six separate exams taken in sequence to get the base level certification to become an NFCC certified counselor. They can also take other certification exams through the NFCC for other types of specialized financial counseling, such as for student loans.
After earning certification, the counselors have to maintain it through continuing education and recertification. “It’s not just a one-off exam. It's making sure they’re maintaining the appropriate knowledge base,” McClary said.
What Is the Financial Counseling Association of America?
The Financial Counseling Association of America (FCAA) is the second major nonprofit membership organization in the industry. Established in 1993, the FCAA doesn’t have the history the NFCC does, but it provides an important service for member agencies and, in an indirect way, for consumers.
“For a credit counseling agency to become an FCAA member they need to adhere to our standards and best practices; need to show proof of accreditation by an independent third party and counselor certification; and need to provide documentation that they are licensed/registered in the states they offer services,” said Lori Pollack, the executive director of FCAA in a phone interview with The Balance. “What this means for consumers is that they are working with legitimate, licensed companies.”
The FCAA says it checks members’ licensing status in each state on an annual basis. “Not every state requires licensing, but we know which states do, and want to make sure we have members that are compliant,” said Pollack.
While the FCAA does not interact directly with consumers, it does field occasional consumer calls about credit questions. It refers such callers to member agencies that are licensed in the consumers’ states.
The FCAA’s other main function is to keep its members informed of regulatory and other developments. “The FCAA works with its members by keeping up on legislative changes (state and federal), changes in creditor policies, news, and anything else that could affect our members and the consumers they work with,” said Pollack.
Credit Counselor Accreditation
Unlike the NFCC, which requires that counselors at member agencies become certified through its own program, the FCAA is more flexible. “There are a handful of credit counselor certification programs, and we allow any of those programs that have been allowed by the states,” said Pollock. This gives members an opportunity to find certification programs that may be more affordable, he said.
What Do These Organizations Mean for Consumers?
“The good news about working with a credit counseling agency that has membership in either association is that they both have strict standards and best practices that members have to adhere to,” said Pollack.
At a time when many lower-income consumers may be facing financial hardships—particularly as COVID-era forbearance programs begin to sunset—it’s important to seek help in the right places, said Ed Mierzwinski, senior director of federal consumer programs for U.S. PIRG, a public advocacy group. “People are going to owe a lot of money. So is it worthwhile to check to see if a company you’re thinking of having help you is a member of one of these associations? I think it is,” he said in a phone interview with The Balance.
Mierzwinski said his hope is that both the NFCC and FCAA maintain strict membership standards to give consumers some peace of mind. So as long as a credit counseling agency is a member of either the NFCC or the FCAA, consumers should be able to feel confident that they are working with a service that is accredited, certified, and kept accountable to maintain its memberships.
How Do the NFCC and FCAA Differ?
The NFCC and FCAA both include members that serve all 50 states, Washington D.C., and U.S. territories.
In fact, the two organizations have collaborated on some industry initiatives, especially during the COVID-19 pandemic. “We’ve done a lot in recent years to coordinate our efforts with FCAA and others,” said McClary. “We’ve been working hard this year and in the last year in response to COVID to bring everyone in the nonprofit credit counseling sector together to solve problems and make sure some of the programs developed are evenly applied and accessible.”
Still, there are some differences to note:
- The FCAA allows for-profit counseling agencies to be members, although Pollack noted they still must adhere to strict requirements and standards set by the states and by FCAA.
- The NFCC has its own counselor certification requirement while the FCAA allows certification from multiple sources.
- Of the two organizations, the NFCC has more consumer-facing resources on its website, including a monthly budget planner tool and a comprehensive content hub. The FCAA’s website is directed at facilitating connections to its members.
Another key differentiator is that the NFCC is able to offer pass-through funding to its member agencies to help support their ability to provide counseling, said McClary. “Some are pilot programs and regional in nature,” he said. One example is Renter Advantage, a $4.4 million grant helping NFCC members assist struggling renters.
Because of these distinctions, some agencies may decide it’s worth it to carry dual membership—right now there are four, according to Pollack. “I can speak from personal experience that I used to work for an agency that was a member of both NFCC and FCAA,” said McClary. “There are different benefits that you get from membership from each organization, so it doesn’t have to be a choice of either or.”
|Number of Members||51||23|
|Area of Service||All 50 states, D.C., and U.S. territories||All 50 states, D.C., and U.S. territories|
|Services Offered||Debt management plans; credit report review; homeownership counseling; reverse mortgage counseling; foreclosure prevention counseling; bankruptcy counseling; small business owner financial coaching; student loan counseling||Credit report reviews; debt help; debt management plan; financial education; bankruptcy certificate; student loan repayments; housing assistance and counseling|
|Members||Nonprofit credit counseling agencies||Nonprofit and for-profit credit counseling agencies|
|Certification Requirements for Counselors at Member Organizations||Must be certified by NFCC||Must be certified by an approved certification program|
|Membership Cost||Not disclosed, but determined in part by the overall operating budget and revenue of an agency||Minimum dues of $2,500 and maximum dues of $18,500 (based on revenue)|
How to Use the Resources Offered by NFCC and FCAA
For anyone who is deciding whether or not to seek financial counseling, starting that journey with the NFCC or the FCAA is a good first step. In addition to identifying member agencies, you will also find lots of informational articles at NFCC.org that can help you understand key concepts such as the differences between debt management, debt settlement, and credit counseling, or when you might consider bankruptcy.
What About the U.S. Department of Justice?
Another resource for consumers looking to vet counseling agencies is the U.S. Department of Justice (DOJ), which approves bankruptcy counselors. However, its approval process is focused on pre-bankruptcy counselors. Other financial counseling services that agencies in its database may provide, including for debt relief, have not been evaluated by the program.
The Bottom Line
If you decide to proceed with debt counseling, either organization can help you find a member counseling agency to meet your needs. However, it’s always smart to do your own due diligence before you commit to a financial counseling program, Mierzwinski said. You can research them online, look them up on the Better Business Bureau, and seek further tips on credit counseling at the U.S. FTC website.
During your evaluation, pay attention to any red flags that might signal that an agency could be predatory. If a company asks for a lot of money in advance or makes unrealistic promises or guarantees, watch out. “In the debt management and debt settlement worlds, there’s a great deal of potential for illegal schemers to come in and take your last dollar,” Mierzwinski said.