Recent economic troubles have hit everyone hard. Even for people who have recovered their income since the recession, many still have outstanding credit card debts and other credit issues. Moreover, your credit history can stay with you for a long time. Late payments can stay on your record for as long as seven years, and other types of credit information, like judgements, liens, and defaults.
Your credit plays a major role in your life. Credit checks are used to determine everything from your eligibility for loans and financing to hiring decisions by employers. Moreover, your credit score has a large influence on what kind of interest rates you’ll get for financial products. Therefore, having a better credit score can save you tens or even hundreds of thousands of dollars on interest payments across your various financial products.
Because of the vital role that credit plays in your everyday life, consumers are increasingly looking for ways to improve their credit and overall financial situation. While there are a few different options when it comes to enhancing your credit score, one of the most successful options is credit counseling.
What is Credit Counseling?
Credit counseling is an intensive look at your credit use and spending habits, with the goal of adjusting these habits to put you in a better financial situation. You’ll work with a certified professional to get a better understanding of where your money goes.
Credit counseling also frequently has a credit repair component. Credit repair is the process of going over your credit report to find negative and/or inaccurate items that can be challenged, and then working to remove them. Credit repair is one of the fastest fixes for bad credit. However, credit repair is best done with credit counseling to ensure that you understand how to use credit in a beneficial way, instead of accumulating even more debt.
There are several firms that offer credit repair services without credit counseling. While these companies get short term results, they don’t have the same long-term success rate that credit counseling offers. Therefore, we always recommend that credit counseling be part of any credit repair effort.
Who is Eligible for Credit Counseling?
Anyone is eligible for credit counseling. There are no specific qualifications, and no restrictions. Even people with amazing credit scores can benefit from credit counseling to ensure they’re getting the most out of their credit.
Moreover, credit counseling is a good idea for consumers before they make a large purchase, like a house or car, or take out a large loan to do something like start a business. Credit counseling will help you understand the sometimes-arcane terms and conditions that frequently accompany financial products. Additionally, improving your credit score will lower the interest rates you’re offered on these financial products, which can save you tens of thousands of dollars over the course of repayment.
Online Credit Counseling
One of humanity’s greatest inventions is the internet. Many people don’t have time to meet outside of work during regular business hours, and few businesses stay open exceedingly late to accommodate their clients. Online credit counseling offers a cost-effective solution to busy people who want to get a better understanding of how credit works and improve their credit score.
Many of the best credit counseling and credit repair services offer online access. This means that you can access credit counseling resources 24/7. A lot of online credit services also have live chat and other communication options so that you can get help from an actual person at any time of the day. These services offer tremendous flexibility when it comes to understanding your credit, and getting the best results from credit counseling.
Credit Counseling and Credit Score
We’ve mentioned briefly how credit counseling can help your credit score through credit repair services. Those services are a short-term fix to a low credit score. Credit counseling helps you understand how credit, credit scores, and credit reporting works so that you can adjust your behaviors and gradually build up your credit score.
Credit counseling can help you understand the different things that go into a credit score so that you can understand how to adjust your spending habits to improve your score. For example, one thing that helps determine your credit score is the mix of different credit accounts that you have. Creditors want to see a good mix of installment loans and revolving credit, and a credit counselor can help you tweak the way your finances are structured to boost that score.
Additionally, credit counselors can recommend products that improve your credit score. For example, another component of a credit score is the percentage of your revolving credit that you’re using. A credit counselor might spot that you are using too much of your revolving credit, but lack installment loans. This counselor might recommend a consolidation loan to clear your credit card debt, lower your credit utilization, and diversify your credit. At the same time, a credit counselor can help you adjust your spending habits so that you don’t find yourself facing the same issues again.
Advantages of Working with a Credit Counselor
Many consumers have heard that credit counselors and credit repair services don’t have access to any information that isn’t available to the public. While this is partially true, that doesn’t mean that you can get the same results be researching for yourself that you would get with a credit counselor.
A credit counselor already knows the information that you would be researching, which saves you a tremendous amount of time. Moreover, credit counselors have a better understanding about how different aspects of credit interact with each other, which can be hard to find online. Credit counselors are also able to provide an objective, professional opinion about your credit situation. Frequently, getting an honest and objective evaluation is more productive at helping people change their habits than when they do the evaluation themselves. Finally, the information online and that is available to the public is very general. Credit counselors will be able to review your situation and rapidly diagnose the best steps for you to take to improve your credit and establish good spending and financial habits.