Credit counselling, while ostensibly all about helping you correct debt problems, is also useful for preventing them in the first place. In fact, you can consider that myth number one as we get into the subject of debunking credit counseling myths.
Myth Number One: You Have to be in Debt to Benefit
The reality is everyone should spend an hour or so with a debt counselor before applying for their first credit card. A good credit counselor will help you understand how to avoid financial hardships and plan for long-term financial stability by budgeting, saving and planning for financial challenges.
Having this information beforehand can save you the pain and cost of significant financial mistakes. Far from being a solution one should seek only after experiencing those issues, credit counseling can help you prevent them in the first place.
Myth Number Two: Credit Counseling Can Reduce Your Credit Score
The truth here is waiting to consult a credit counselor until you’re having money problems can hurt your credit score. In other words, it’s exactly the opposite: Not consulting a credit counselor can hurt your credit score. Just to be clear, your credit score is calculated based upon information appearing on one or more of your three credit reports. Credit counselor consultations do not get reported, therefore they have no effect on your score.
Myth Number Three: It Costs a Lot of Money
The fact of the matter is credit counseling consultations are provided free of charge by a number of non-profit entities. Reputable agencies will send you free information without requiring you to surrender any details about yourself or your financial situation. Further, an initial meeting with a counselor to discuss your situation is free of charge.
Moreover, the majority of the debt counseling services provided by credit counselors also come at little or no charge. Yes, you will incur fees if you enter a debt management plan, but even then the costs are moderate and well worth what you’ll pay when compared to what defaulting upon your obligations will ultimately cost you.
Myth Number Four: I’ll Look Dumb
Nobody is born knowing everything they need to know to live a comfortable life. Life is an art we learn to master as we go along. Yes, truly fortunate individuals are born into situations in which the most important life lessons are imparted in the home — particularly in regard to finances. However, parents can’t teach what they themselves do not know.
Thus, there is no shame in seeking professional assistance to help you up your game. You already do so in other aspects of your life; why should this one be any different?
Credit problems are encountered by far more people than you might imagine. You’re not the first and you most assuredly will not be the last. Counselors have seen many people in similar situations before you and they’ll see many after you. They don’t judge. Rather, they use their experiences to help you find the best path forward.
Myth Number Five: My Financial Situation Is Wrong for Credit Counseling
Whether you believe you make too much money — or you don’t make enough money — to benefit from credit counseling, you’re wrong. It’s not about how much money you make. It’s about what you do with what you make. People earning well into the six- and seven figure ranges annually have money problems just like those who generate substantially less.
Myth Number Six: My Age Is Wrong for Credit Counseling
If you’re old enough to legally acquire a credit account, you’re old enough for credit counseling — and you’ll never be too old for it. Given it’s more about your situation than it is where you are in life, credit counseling can be a benefit regardless of age, social situation or future goals.
Myth Number Seven: My Situation Is Too Far Gone
Credit counseling has benefits, even if you’re on the verge of filing for bankruptcy protection. In fact, one of the requirements of being granted bankruptcy protection is attending a session with a credit counselor to help you figure out how things went wrong and determine what you can do to avoid having it happen again.
Debunking credit counseling myths such as these is a good first step toward ensuring your financial future is a bright one.
