Researchers from The Ohio State University reveal the impact of credit counseling.

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Since its launch in 2013, the Sharpen Your Financial Focus (Sharpen) initiative of the National Foundation for Credit Counseling (NFCC) has impacted the lives of more than 60,000 American consumers, helping them identify and resolve immediate financial concerns, gain a deeper understanding of financial literacy and debt management, and move toward long-term financial stability. To measure the extent of its impact, an independent, scientifically based evaluation was conducted by researchers at The Ohio State University. The study found that Sharpen clients perform better on a variety of credit outcomes, most notably, showing improvement in levels of revolving debt and total debt, better money management and improved financial confidence as compared to a control group of consumers who did not receive the counseling.

Researchers at The Ohio State University conducted a comparative evaluation, matching 6,094 Sharpen clients to a group of 6,005 similar non-counseled individuals. Stephanie Moulton, PhD, associate professor at the John Glenn College of Public Affairs at The Ohio State University served as the Principal Investigator for this study. Outcomes for the two groups were measured on a quarterly basis from the quarter prior to counseling through six quarters post-counseling. When compared to those without counseling, Sharpen clients showed remarkable improvements in available liquidity, levels of revolving debt and overall debt balances. For example, during the 18 months following counseling, Sharpen clients decreased their revolving debt by nearly $6,000— a statistically significant reduction of $3,600 more than the comparison group. Sharpen participants reduced their total debt by almost $9,000—a statistically significant reduction of $11,300 more than the comparison group, whose total debt increased slightly during the same period. Also noteworthy, the ratio of available credit for counseled clients grew at a faster rate than the comparison group after the first post-counseling quarter and was 19% higher six quarters after counseling.

The researchers were able to track an array of credit indicators quarterly for 18 months to better isolate the impact of credit counseling relative to other life events such as bankruptcies, debt charge offs or participation in a debt management plan. Significant levels of debt reduction remained even after accounting for the other events, establishing one of the noteworthy conclusions of the research.

Based on the responses from an NFCC survey, Sharpen clients reported that the program is making a positive impact in their financial lives just three months after counseling. Among those, 67 percent say the program helped them better manage their money, 68 percent say it helped them set financial goals, 70 percent improved their overall financial confidence, and 73 percent are paying their debt more consistently.

In addition to tracking survey outcomes, the evaluation tracks credit report outcomes for a subsample of nearly 9,000 Sharpen clients. This analysis also demonstrates that Sharpen is making a positive financial impact on participants’ financial lives. Six quarters after counseling, Sharpen clients 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 clients.
While the data offers compelling evidence that counseling changes lives, it is the people represented by those numbers who can express how their lives have been changed. “Financial counseling and debt management have given me confidence and insight,” said Martha Souder, a client of NFCC member agency Guidewell Financial Solutions. “These are lasting rewards I will carry into the future.  It feels great to finally be financially secure!”
A summary of the research is available for download here.
Information about Sharpen Your Financial Focus can be found here.
The complete Sharpen Your Financial Focus evaluation is available here.
Details about the National Foundation for Credit Counseling are available here.
To learn more about the Sharpen Your Financial Focus initiative, visit