With your own planning as well as the advice of others – including this very blog – you can make some pretty significant strides when it comes to bettering your credit. But what can you do if it all feels like simply too big of a challenge – if your credit problems are too far beyond your means to remedy by best practices alone? This is when it may be time to look for credit counselling.
What Is Credit Counselling?
Credit Counselling is a range of services aimed at providing professional and confidential help with credit repair. There are both for-profit and nonprofit firms working in the credit counselling sector. Counselling firms will most likely be able to help you create a step by step debt reduction plan with a variety of tactics depending on your specific financial situation. Credit counsellors cannot offer advice on consumer proposals or bankruptcies.
What is Debt Management?
A debt management plan is an informal proposal your credit counsellor makes to your creditors on your behalf. It allows you to consolidate your debts into one affordable monthly payment. In some cases, you may not have to continue to pay interest on your debt. You’ll usually have to repay 100% of your debts, though.
When Should I Seek Counselling?
If you’re finding that you have significant difficulty paying back debt, especially debt that is owed to multiple sources at varying rates of interest, that can be one of the signs that points you toward a credit counsellor.
Credit counselling may also be an option for you if you are close to bankruptcy or considering defaulting on debts that you already owe.
The long term effects of credit counselling will likely have a positive effect on your financial health, but you should be prepared for the road ahead before starting a debt management plan. For instance, many counsellors will suggest that you close unused accounts: this could change your debt utilization ratio and negatively affect your credit score for some time. And, of course, late payments to a counsellor’s consolidated debt plan will show up as late payments on the accounts that are part of the plan, too. Are you prepared to take these risks?
Where Can I Find A Counsellor?
While there are not strict legal definitions that define who can and cannot act as a debt counsellor, there are certifications at the provincial and national levels that lend more credibility to a given counsellor or agency. It’s wise to look closely at the reputation of any counselling agency before starting a plan: there have been many reports of so-called “counsellors” taking advantage of clients by charging exorbitant fees. Go with the most reputable firm you can find! You can start by looking at some of the links below:
Want another option to conslidate your debts and improve your credit? Check out Progressa!