Consumer debt can make your life a lot tougher than it needs to be, especially when it’s becoming too much for you to manage with just your income and savings. That may be the case if you’re located in an urban area like Red Deer, where the average cost of living can be high compared to other parts of the country.
The good news is that, whether you’re experiencing a debt problem or you’d just like some extra financial knowledge, credit counselling can help. Keep reading if you’d like to learn more about this service.
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What to Expect From Credit Counselling
Although courses, solutions, and teaching methods may vary from agency to agency, and counsellor to counsellor, the types of products and programs that you can receive through credit counselling are often the same.
Essentially, credit counselling is a service that can, under the best of circumstances, help you deal with your financial issues in the most efficient and affordable way possible. The counsellors that work at these agencies are trained and ready to offer you a variety of debt management techniques.
A credit counsellor’s services can include (but aren’t limited to):
- Lessons/advice about budgeting, saving, and money management
- Negotiations with lenders and debt collectors
- Administration of debt consolidation programs
- Help finding debt consolidation loans and other credit improvement products
- Referral to consumer proposals and bankruptcy programs
Set Your Expectations Appropriately
Before you enter credit counselling, it’s essential to understand that this service, while helpful in plenty of ways, is not a miracle solution that can simply make your financial problems disappear. For instance, while a credit counsellor can help you enter a debt consolidation program which, when accepted, allows you to pay off your debt through monthly installments. However, it’s up to you to make all your payments on time.
What a credit counsellor can do is teach you what you need to know about your finances and, if necessary, refer you to a specific debt management service. You will have to put in most of the effort by changing your financial habits, otherwise many of those same solutions will be less effective.
Did you know that bad credit can affect your daily life? Learn more here.
How Credit Counselling Can Influence Your Credit
Another important thing to understand about credit counselling is that it can have an impact on your credit. Although none of the courses and advice a counsellor gives will have a direct correlation, some of the programs and products they can connect you with will show up on your credit report, potentially changing your credit score, history, and account ratings.
For example, if you were to enter that same debt consolidation program, it’s likely that your lenders would report your payment activity to Canada’s credit bureaus (Equifax and TransUnion). Soon after, any credit accounts associated with the program would receive a credit rating of R7. A record of the event will then appear in your credit history, where it will remain for several years, even after it’s over.
If you make all your monthly payments as agreed, your lender will report the debt as paid and the situation will gradually reverse itself. Of course, any payments you miss will only make things worse for your credit. On top of that, lenders may examine your report when you apply for new credit during (or soon after) the program, then decide you are too risky to approve.
Make sure you ask your chosen counsellor about all the potential risks and rewards involved with credit counselling in Red Deer.
How long does credit counselling take? Find out here.
Choosing the Best Credit Counselling Service
Before you attend your first session, it’s best to do some prior research so that you can choose the most reliable one. After all, some of your personal and financial information may come up during the process, so it pays to be careful.
Things to watch out for when searching for credit counselling:
- At your request, any legitimate counsellor should be able to provide proof of their training and a valid license to operate in your province.
- They should not avoid any questions you have about their services or judge you because of your financial problems.
- Their agency should have a physical address and a listing with the Better Business Bureau, good customer reviews and a reputation for success.
- Although many agencies/counsellors work on a for-profit basis, they should not charge you anything until one of their services is in effect.
Avoiding Repair Scams
Unfortunately, there are many illegitimate organizations in Canada posing as credit counselling sources so they can steal your money and identity. These scam artists are banking on your need for a solution and may use it to take advantage of you.
Never trust any “credit counselling” source if they don’t have good credentials or a real address, if their customer reviews look fake, or if they demand some kind of payment before they actually help you. If any of these red flags come up, walk away and report them to the proper authorities.
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When to Seek Credit Counselling
Although credit counselling can take a lot of time and hard work to get through, it’s well worth the effort when you consider the potential benefits. Then again, the services they offer may not be right for your particular financial situation, so it’s best to weigh your options and compare solutions before you make your decision.
Credit counselling is likely the best choice if:
- A professional financial advisor recommends it.
- You often have trouble budgeting and keeping track of your money.
- Your income, savings, and regular credit products cannot solve your debt issues.
- You’re behind on all your bills and payments.
- You’re suffering from a low income, bad credit, or another serious financial issue.
- You can comfortably handle any costs or drawbacks involved (services fees, reduced credit health, etc.).
- Your debt problems are so unmanageable that you’re in danger of filing a consumer proposal or declaring bankruptcy.
Look here to see more ways of managing your debt.
Getting The Financial Help You Want
Whether you’re struggling with debt or credit issues, Loans Canada offers a wide variety of options to help you regain control of your finances and create the future you want.