What is the Impact of Credit Counselling on My Credit?
In Canada, several Canadians arrive at a conclusion on what debt relief option suits their finances based on unreliable and inaccurate information. This triggers the misfortune of most Canadians who end up choosing the incorrect debt relief option for them. Most significantly, it causes a more difficult financial proposition, making them more incapable to manage their circumstances because of choosing the incorrect debt relief solution for their financial condition.
Credit counselling, for instance, is misinterpreted with the false information conveyed widely. This misinterpretation involves the idea that credit counselling does not yield any impact on your credit record, unlike the other debt relief programs such as a consumer proposal. The truth is credit counselling hurts your credit report negatively. Besides, it will show on your report and will make creditors aware that you’ve been in a debt management program for up to three years when the plan is settled. Hence, credit counselling will remain in your credit record for up to three years.
The Exact Impact of Credit Counselling on Your Credit Report
If you’re a Canadian consumer, who is currently undergoing a debt management plan or approach such as a consumer credit counselling, you cannot deny their situation to both current and potential creditors. In fact, if you decide to enter a credit counselling program, your credit report will have a note indicating that you’re undergoing a debt management approach. Since most creditors will conduct a check on your credit standing, this may hinder your chance to get accepted for new credit. Creditors may question your capacity to afford a new debt while you’re still coping up in paying your debt under your credit counselling agreement.
In consumer credit counselling, the note indicated in your credit report will not perish instantly even after repaying your debt. It will stay on your report for about 2 to 3 years, which implies to possible creditors that you’ve struggled with your debt payments in the past. Also, how the notice appears on your credit is similar in a consumer proposal or notice of bankruptcy. However, a note specifying your filing of bankruptcy is still more severe than any debt management program for creditors. This is because bankruptcy, as it appears in your credit, will surely disqualify you for any loans that come with low-interest rates within 7 years.
Is the Impact of Credit Counselling a Disadvantage?
Do not right away conclude that an impact on your credit is a severe disadvantage while managing your debt payments. The good side of it is that your creditors will be triggered to thoroughly assess your status before giving a loan that you cannot afford. Besides, a couple of years that it will remain in your credit is more tolerable rather than without any debt management program that will aid you in solving your mound of debt.
You may need to take into consideration the significant amount that you can keep when seeking debt relief alternatives rather than continuing to solve the problem yourself. This can be perceived more when you’re seeking for a debt settlement approach. Although, you’ll have a hard time getting accepted for loans while the settlement notice is indicated in your record; the extra amount that you can save can be utilized in paying for your principal. This way, you can pay off your debt earlier. Thus, the settlement that you can get in paying less than what you owe from your creditors in exchange for a temporary low credit rating is worth the benefit that you can get towards financial freedom.
Understanding Your Options
Normally, it is difficult for someone to assess what debt solution would be more feasible or suitable for them. This is the very reason why we exist. To help you understand more about the options that are right for you, simply fill out the debt relief form and get reliable help.
CONSUMER PROPOSAL EXAMPLE
Example Unsecured Debts
|2||Credit card 1||$6,812|
Your Monthly Repayments Would Be
a Consumer proposal $748
(total contractual repayments)
a Consumer proposal $295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances.