7 Signs You Need Credit Counseling
Not sure if you should go for credit counseling? This guide would help you decide if credit counseling is worth your time by identifying Signs You Need Credit Counseling. Unlike the typical high school counselor, you don’t have to wait till you get into trouble before seeing the credit debt counselor. A credit counselor does more than advising, they help you attain a state of financial independence. So what on earth is Credit Counseling?
What is Credit Counseling?
Credit counseling aka debt counseling is a procedure individual debtors go through, in a bid to settle their debts. Credit counseling agencies help with Free budgeting, credit report reviews, financial decision-making, and referrals on equipment and resources.
With a debt management program, DMP, A certified credit counselor can help you pay off your debts quicker. The credit counseling agency could also help you negotiate a reduction in the interest rate and extension in payment duration, depending on your case.
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3 Types of Debtors That Need Credit Counseling
These three individuals are advised to go for credit counseling:
Chapter 13 Gang
Though it’s not advisable to file for bankruptcy, sometimes people don’t mind the odds. Debtors who wanna file for chapter 13 bankruptcy are mandated to try out credit counseling before heading to court.
Debtors Whose Monthly Income Can’t Pay Their Debts
If you find yourself in a situation, in which your monthly wage isn’t enough to make the minimum payment on your credit card balance or your debts are no longer bearable, my dear, it’s high time you met a professional credit counselor.
Individual Debtors That Can’t Successfully Negotiate With Their Lender
Before reaching out to a credit counseling agency, you should try negotiating a reduction in interest rates or an extension in payment period with your lender. Peradventure you couldn’t reach a fair conclusion, see a credit counselor.
7 Signs You Need Credit Counseling
Below are the 7 signs you need credit counseling as soon as possible. Check to see, if you meet these conditions.
Do You Live From Paycheck to Paycheck?
Depending on paycheck and credit cards to survive isn’t advisable. People who live from paycheck to paycheck barely save or have emergency funds.
According to the balance report, “At a minimum, you should have three months of living expenses in your emergency fund.
This means if you need $3,000 a month to cover your basic needs like your mortgage or rent, utilities, gas, and food, then you need $9,000 in your emergency fund.”
We live in a world where s#!t happens and you don’t want to be helpless when an economic crisis hits your firm, state or country. I’m not a prophet of doom, but I think every US citizen should be prepared financially, by setting aside some funds for emergency purposes.
The amount required to maintain various families differs, so if you can’t figure out your emergency funds value on your own, you should see a credit counselor.
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Do You Make Late Credit Card Payments?
Not paying your credit card debts on time is a threat to your credit score, which could stop you from accessing more credits from your credit card company or getting a mortgage in the future. It’s a sign of poor budgeting on your part and could get you in a mess.
To enhance your budgeting tools or skills, get a credit counseling session. As mentioned earlier, part of the job of a credit counselor is to help you draft a budget suitable for your income and basic needs.
What’s Your Credit Score?
Ignorance is not an excuse, but it could be a pointer that you need credit counseling. Not knowing your credit score means you’ve not been monitoring the progress of your finances. It indicates that no budgeting whatsoever has been made.
This is not only risky but also detrimental to your future. Assuming you’re not making enough money to pay your credit card debts and you wanna transfer your credit card balance to a 0% interest rate account, your lender would consider your credit score before giving you such privilege.
You can check your credit score by requesting a credit card report from each of the three credit reporting agencies — Equifax, Experian, and TransUnion.
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What Is a Good Debt to Income Ratio?
Did You Get a Collection Call Recently?
Collection agencies are not the chatty type. If they’re contacting you often, there’s fire on the mountain.
In cases where a bank or lender trades your debts to a third-party collector, these debt collectors have the right to collect payments on behalf of your original lender. Private debt collectors are fond of collecting dead debts — debts that exceed the statutes of limitations as set out by the FTC.
If you find yourself in this messy situation, don’t hesitate to see your credit counselor. They know the best means to tackle such cases.
How Big Is Your Credit Debt?
The best way to pay off your debts is to face it. We all have a habit of avoiding the problems we can’t solve. When it comes to credit card debt, you gotta be aware of the total amount.
In cases where you’ve developed a phobia for your debts and you feel you need help, the credit counseling agency is the best go-to. They’ve helped thousands of debtors clear their debts, in the past. They’re in the best position to help.
Are You Dependent on Cash Advances?
Sometimes, getting cash advances is inevitable, but depending on them for survival is a bad idea. Unlike other forms of loan, cash advances could exceed 10% and there’s no grace period.
Instead of depending on cash advances for survival, you should talk to your credit counselor. They could help you design a long-term plan that would help you live comfortably without taking cash advances.
Do You Avoid Bedtime Money Talks With Your Spouse?
Don’t Lie! You can deceive your colleagues if you have the stomach for it, but deceiving your spouse is a grave mistake. When life hits you hard, your spouse is the first run-to, so why lie to him/her.
Though the credit bureau Experian has made a detailed report on this issue, I’ll quote no research ’cause this is a personal matter. I understand that you’re trying to make your spouse happy, but at least talk to a credit counselor about your loan. Talking to an impartial third party, like a debt counselor could help you figure out a better strategy to fix the problem.
To all those drowning in credit card debts, get help: see a debt counselor today or explore other options like debt settlement or bankruptcy.