Credit counselling is a process wherein individual debtors get help with debt settlement through education and budgeting, using a variety of analytical tools. The goal of this exercise is to reduce and ultimately eliminate debt, and increase CIBIL score for the consumer. It is credit counselling or credit health management companies that provide a range of services for people in financial difficulty. A professionally trained and certified counsellor is assigned to work closely with an individual availing of these services.
When should you avail of credit counselling?
A debt problem is not difficult to identify – in any situation where you believe that the amount of money you owe lenders is only spiraling upwards, and you have no way to control it, is when you should consider availing credit counselling services. If it is increasingly harder to pay mounting bills or to save money, reaching out for timely help can be an effective solution.
What are the benefits of credit counselling?
When you choose to enroll for counselling, you get guidance on how to reduce your debt, the proper way to use credit cards, managing your personal finances etc. You will also gain an understanding of your debt-to-income ratio, and understand ways to plan your expenses better. Further, as what works for one person may not work for another, your counsellor can greatly help with customising a debt management plan that works uniquely for your situation. With proper guidance it will be possible to extricate yourself out of a seemingly impossible difficult position and enhance credit score.
Why is credit counselling important?
A credit report is a snapshot of your credit history. Delayed payments or bad loans can negatively impact your score. With credit counselling, as you better your score, your chances of getting a fresh loan at the best terms are significantly higher.
In addition to tangible benefits related to payment of dues, credit counselling can help you achieve long term financial security for yourself and your family, and eventually reach your goals and dreams – for example, owning your own home or a car, going on a long dreamed of vacation, ensuring you save enough for a child’s education and marriage, and ultimately envisage retiring in comfort. You would also be able to rid yourself of the constant stress and worry about your financial position.
With credit counselling, you would be guided as to how to use credit responsibly and over a period of time, to take reasonable steps to overcome problematic debt and improve your financial health.