By Bruce McClary
National Foundation for Credit Counseling
In honor of National Credit Education Month, the ABA Foundation is hosting an article series to spotlight strategies, tools and best practices to help consumers navigate credit challenges with confidence. Each week, a partner organization will share insights grounded in their expertise on how banks can strengthen credit resilience from rebuilding credit to managing debt.
As we kick off National Credit Education Month, it is essential to look beyond the balance sheets and understand the pressures facing the modern borrower. At the National Foundation for Credit Counseling, we are seeing firsthand how these macro-economic shifts translate into micro-economic challenges for households across the country.
The current credit hurdle
The primary challenge facing today’s consumer is less about gaining access to credit and more about managing it sustainably. With credit card APRs at elevated levels, even disciplined borrowers are finding that a greater share of their monthly payments goes toward interest rather than reducing principal.
This dynamic contributes to what we describe as a “fragility gap.” Our proprietary data shows a rising number of higher-income households seeking financial counseling, alongside a broad surge in debt-to-Income ratios — now averaging above 60%. When debt service consumes such a significant portion of gross income, even a minor economic tremor can lead to a total collapse of household stability. For financial institutions, this shift underscores the importance of proactive risk management and early-stage engagement.
Education as a stabilizer
This is where credit education pivots from a secondary resource to a primary economic stabilizer. Effective credit education does more than just explain a credit score. It empowers consumers to navigate complex repayment environments and make informed decisions about their debt-to-income ratios.
When consumers engage with NFCC-certified counselors, they are not just seeking a “fix” for a current problem; they are gaining the financial literacy required to remain “bankable” for the long term. As past research suggests, consumers who understand how to manage their credit through high-stress cycles is less likely to default and more likely to maintain a productive, multi-product relationship with their financial institution.
Strengthening the partnership
The relationship between banks and the NFCC is a vital component of a healthy financial ecosystem. By integrating credit education and counseling resources into the customer journey, banks can provide a “safety net” for customers before they reach a point of delinquency.
Partnering with the NFCC allows banks to:
- Mitigate risk: Proactive counseling helps at-risk borrowers restructure their obligations before they impact the bank’s bottom line.
- Build loyalty: Customers remember the institutions that provided them with resources and a path forward during challenging times.
- Foster resilience: Together, we can move the needle from temporary debt relief to long-term financial health.
As we navigate this complex credit landscape, our goal remains clear: to ensure that every consumer has the tools and the knowledge to build a resilient financial future. We look forward to working alongside the banking community this month, and every month, to make that goal a reality.
Bruce McClary is senior VP for membership and communications at National Foundation for Credit Counseling.
The ABA Foundation also announced the launch of its Rebuild Right: Safe Credit Recovery & Responsible Debt Solutions campaign, a new national initiative designed to empower consumers to rebuild credit responsibly and avoid harmful financial pitfalls. The campaign, is hosted in collaboration with the Wells Fargo Foundation and Working Credit. Through this campaign the ABA Foundation and its partners aim to equip both consumers and bank volunteers with reliable information, practical tools, and expert insights.
