Getting access to credit is easy today, if you have made the effort to maintain a good CIBIL score. However, sometimes people do tend to go overboard with credit and may end up in a debt trap if timely precautionary measures are not implemented. If you are servicing too many large loans and have a fear lurking that what you may be doing may not be enough, it is perhaps time to seek credit counselling. Unlike popular perception, credit counselling is not only for those with a bad credit score. You can seek credit counselling even if you have large loans or simply wish to improve your CIBIL score. Here are some good reasons to do so:
Timely credit counselling can help enhance credit score
The cardinal mistake that people make is approaching credit counsellors only after they have run into financial trouble. This may be the time when they are unable to service debt or may even be at the brink of facing legal action. While credit counselling is equipped to handle situations such as these, the essential difference in opting for such services at such stages means that some damage may already have been done.
Opting for credit counselling at an earlier stage on the other hand can help you get a better grip on your finances by guiding you on the best ways to manage your debt skilfully on the one hand and creating wealth on the other by chalking out a good financial plan. What’s more is that doing things right to manage debt, improve CIBIL score on a continuous basis. Going to a credit counsellor at an early stage when you are servicing two or more large loans also means that you will be equipped with debt management skills that will come in handy for the rest of your life.
Can replace high cost debt with low cost debt
As pointed out earlier, good credit counselling is all about telling you about the best use of your resources. For instance, you may have decided to take a vacation on impulse with the family and do not have enough cash in hand to pay for this trip. While you use some of the money you have stashed away somewhere to pay for the tickets, you think of making use of your low interest credit card to fend for the remaining expenses, thinking you have one whole billing cycle to make repayments.
But as soon as you return from your vacation, you encounter a blip in your business processing that ebbs your cash flow in the short term. Thus, you are stuck with high cost debt on your credit card (that does not seem to be charging any lower rate of interest than its peers) and a relatively short time to service it. A credit counselling agency, would have suggested taking a personal loan instead of making expenses on your credit card. That way you automatically reduce a high cost debt by opting for a personal loan that will cost you way lesser than a credit card. What’s more is that you get a longer period to make a repayment on your loan, so that you can continue to make timely repayments on your personal loan, even when you are trying to overcome a short-term blip in your business.
Helps with consolidation of multiple loans and stalls legal action
Sometimes you walk into a debt trap unwittingly with too much debt to service and clueless about the right way to service them. Your creditors are not taking kindly to the late repayments or non-payments and are threatening legal action against you. At such times, if you are at your wits end trying to find out a plausible solution, the best place to get to is a credit counselling agency. The said agency will look at your debt situation and come up with the best solution of how to deal with the problem at hand.
A credit counselling agency may come up with a range of solutions. It may help you negotiate a deal with your creditors about a better repayment plan that you are better equipped to service. It may suggest a debt consolidation plan by opting for an easy personal loan and finally stall legal action till a mutually agreeable situation has been decided upon. Any individual struggling with debt must consider credit counselling agencies that provide the proverbial “stitch in time” to prevent the “nine” at a later stage. It is thus highly recommended to use the service of such agencies to learn from experts about debt management. Making crucial changes to your debt repayment plan per the suggestions of a credit counsellor will also help you increase your credit score over the long run.
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