As much as it may be hard for some people to accept, not everyone is able to work themselves out of a bad financial situation. Sometimes old decisions or financial mistakes cause long-standing issues and costs. While people can often feel embarrassed and sensitive about this situation, we understand that everyone’s situation is unique and we’re happy to help you find a solution to your financial troubles.
One of the downsides to previous negative financial decisions that remain unresolved is that it often leads to an over-extension of credit, increased interest costs, increased rates of defaulting and poor credit scores. A bad credit score (or credit rating) can quickly affect your ability to get a bank loan, credit cards and or lines of credit, further compounding your financial troubles and making a solution more difficult to obtain on your own.
Your credit score is a factor that determines your trustworthiness to lenders—to get a loan with favorable interest and terms, you must have a high credit score.
Your credit score is evaluated on many factors including your debt levels, payment history, credit utilization rates, and the length of time for which each type credit has been available to you.
Fortunately, a bad credit score or rating does not have to be something you live with for forever. Often times it can be remediated through something called credit counselling.
What exactly is credit counselling? Do you need to do it? In this article, we review and explain on it. Please see below to learn more.
More About Credit Counselling
Credit counselling can help you lessen your debt and financial problems, as well as teach you how to manage your finances better. Credit counselling agencies have licensed credit counsellors who can advise on anything related to your financial matters.
Below are some of the signs that you need credit counselling:
#1 You Don’t Know Your Credit Score
As mentioned above, your credit score is what tells the bank and other lenders if they can trust you with a loan or not. If you don’t know your actual score, a credit counsellor can help you understand what it is and how to improve it, if needed. Knowing your credit score is extremely important as it can have a large impact if you need to rely on credit.
If you have good financial habits, such as paying on time and not accumulating high amounts of debt, the chances are that your credit score is good, but it’s always good to be sure with the help of a credit counsellor. They can help you create a new strategy to prevent future financial difficulties as well as continue to increase your credit score.
#2 - You Have No Savings
If you are living paycheque to paycheque and you depend on your full monthly salary to make ends meet, you’re more likely to have to rely on loans in order to make ends meet or to solve any financial issues that may come up. Getting a loan can be costly due to the fact that you have to pay interest rates, administrative charges and you may not always qualify during emergencies, so you should always have some money set aside in case of future emergencies.
Keep in mind that borrowing money should only be a last resort. To prevent yourself from getting into a cycle of requiring loans, consult with a credit counsellor. A credit counsellor will help you create a plan to meet your ongoing debt obligations, get rid of your debt, and they can also help you manage your finances in the future.
#3 - You Have an Overdrawn Checking Account
If you have a checking account, it’s a safe bet that you use it for daily transactions. If you notice that your balance has a negative balance, it means that you’ve taken out more funds than you have. While you can still use your debit card for transactions, it becomes a debt if you keep overdrawing on that same account. When this happens, you will quickly start to see interest charges. A credit counsellor can help you avoid future interest, fees and minimize future potential problems.
#4 - You Rely on Cash Advances
Cash advances can be a necessary evil if you’re in immediate need of money. However, your goal should be to avoid these high risk loans, because you now have to pay back the money you borrowed, but also the high interest and required fees.
And remember, the interest is instantaneous. As soon as you’ve taken out the advance, you’re immediately charged with the interest rate. If you have used cash advances we would strongly suggest you should look into credit counselling.
A credit counsellor can help you with making a long-term financial plan that will benefit you greatly.
Conclusion
While many people try to avoid credit counselling, it exists for a reason. Often credit counsellors can help set you on the right path that can save you thousands of dollars in interest, penalties and fees. They will help you to learn how to manage your money wisely and help you identify potential issues and avoid them in the future.
You can always manage your finances on your own, but sometimes the work becomes too much. A credit counsellor will be there to give you advice on how to manage your money. If you're looking for credit counselling in London, Paul J. Pickering and Associates Limited can help! We aim to help anyone who needs financial assistance and it’s our goal to help you through your financial difficulties, debt management issues or help guide you through making financial decisions. Contact us today for your free consultation!