Can You Climb Your Way Out of Debt with Credit Counselling?

Too often, people make the mistake that when they’re in debt, there are only two options: pay it all back on their own or go bankrupt.

It doesn’t have to be that way, nor should it. It’s alarmingly easy to get into more debt than you should have. While you may have credit limits on your cards, it seems like there’s always another way to borrow money. More often than not, they come with even higher interest rates.

You don’t have to go it alone. One tool that can make climbing out of debt easier is credit counselling services. Working with an accredited Credit Counsellor with a non-profit credit counselling agency, you can get a financial assessment, advice on debt solutions, and help with money management to make debtfreedom a reality.

There are many different paths you can take out of debt. An accredited Credit Counsellor can take a look at your situation and advise you on the right path forward. They can also help you with a Debt Consolidation Program, where you negotiate reduced interest rates (or even zero interest rates) with your current creditors. The relief can go a long way toward making debtfreedom easier.

Frequently Asked Questions About Credit Counselling Services

You’ve heard about credit counselling, but you’re not sure if it’s right for you. These are some of the frequent concerns people have about getting help with their debt.

#1 What does a consumer credit counselling service help with?

Credit counselling can help you with most types of unsecured debt. Unsecured debt has no collateral, meaning auto loans and mortgages are excluded. The most common types of debt that credit counselling can help with include:

  • Credit cards
  • Payday loans
  • Lines of credit
  • Personal loans
  • Other bills that have gone to collection

By helping you manage your money and budget better, credit counselling can also give you a plan for tackling tax debt, student loans, and keeping up with auto loans or mortgage payments.

#2 Can you keep your car loan?

Credit counselling does not impact ownership over your assets or your ability to hold onto other loans. Your vehicle won’t be repossessed, nor will you have to liquidate it to pay your creditors.

The goal of credit counselling is to help you bring your other debts under control and cut the interest rates you pay on unsecured loans so that you can keep up with car payments, rent or your mortgage.

#3 Does paying off credit card debt help your credit score?

Carrying a balance never helps your credit score. When you pay off your credit card debt, you reduce your credit utilization rate – the percentage of credit available to you that you use. Once your utilization rate surpasses 30%, your credit score can really start to hurt.

The one mistake you can make that will impact your credit score is cancelling them once you pay them off. Unless you worry that you won’t be able to stop yourself from using them, leave your cards open but don’t carry a balance on them.

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