The debt-to-income ratio in Victoria is one of the highest in the country (learn more about debt-to-income ratios here). For every $1 that Victorians have in disposable income, they owe $1.89. As debt increases or interest levels rise, it can put a lot of pressure on families who are struggling to make payments.
If you start making less regular payments or missing payments altogether, it can begin to have an effect on your credit score. While there are things you can do as an individual to improve your credit score, not everyone is able to tackle their debt on their own. Thankfully, credit counselling is an option that can help consumers with all sorts of financial troubles get back on track.
Not sure if credit counselling is right for you? Take a look at this.
What is Credit Counselling?
Credit counselling is a common way for people to improve their overall financial health. Whether you need to improve your credit, are having trouble staying ahead of your bills or need help with a budget, credit counselling is a good place to start.
Credit counselling is involves meeting with a credit counsellor to speak about whatever financial issues you need help with. A credit counsellor is someone educated in the space who has the duty of helping people with their finances. They will work directly with you to come up with a plan for improving your situation.
When you utilize credit counselling, you should expect:
- To be treated with respect throughout the whole meeting
- To be working with a trained, educated, and experienced credit counsellor
- To have your questions answered and concerns addressed
- To have an in-depth and completely open discussion about your finances
Remember, your credit counsellor isn’t going to do all the work, you need to be ready and willing to work with them to help yourself as well. They can help you come up with a plan, but you need to make the necessary changes to put that plan into action.
To learn how bad credit can affect your daily life click here.
Choosing the Right Credit Counsellor
So now that you know about credit counselling, counsellors, and what to expect from credit counselling, how do you go about choosing the right credit counsellor in Victoria? While we wish it was as easy as working with the first one you visit, it isn’t. See, not all credit counsellors and credit counselling companies are created equal.
Here’s how to handle your first credit counselling session.
Some have better track records than others, better fees than others and are simply more reliable and trustworthy than others. It can be tough to know which is the right option for you based on one visit alone, so you should head online to see if you can find any reviews or ratings.
Generally, it is a good idea to start with a non-profit, as long as you can find one in your area that is licensed. When evaluating a certain credit counsellor, always be sure to check a few things. They need to be licensed to operate in your province, they shouldn’t have an abundance of complaints against them and the counsellors should all be certified. Also, you want to make sure that you are comfortable with the counsellor before agreeing to work with them. You will be getting into the details of your life and finances, so you want to ensure you are as comfortable as possible while doing so.
The counsellor you work with should be able to help you:
- Manage your money better
- Solve your debt problems
- Learn to responsibly use credit
- Stop collection calls
- Instill better financial habits
While they are not miracle workers, they can definitely help most people in a number of different situations that they may find themselves in.
Read this to find how long your credit counselling can take.
Will Credit Counselling Affect My Credit Score?
If you are already struggling with your credit, there is a good chance you don’t want to do anything else to affect it negatively. Thankfully, meeting with a credit counsellor to discuss your finances will have no negative effect on your credit.
However, this is not always the case. If you enter a debt consolidation program through your counsellor, that will indeed show up on your credit report and could affect your credit. How much it affects your credit depends. If your creditor reports the debt as paid off, it will not reflect negatively on you. But if they report that the debt has been settled, your score will be negatively affected.
Want to know more about what affects your credit score? Check out this infographic.
Credit and Debt Solutions in Victoria
If you’re looking for debt relief options or simply need help getting back on track with your finances, Loans Canada can help. We can match you with a wide variety of credit and debt products to suit your needs.