How to Know if You Need Credit Counselling: 6 Big Signs

Are you considering credit counselling, but you are not sure if it’s right for you? Today we will cover six crucial considerations to help you determine if this is the right path for you.

First, let’s talk about what credit counselling in Canada means. 

What is credit counselling?

Credit counselling in Canada involves having certified financial counsellors help debtors settle their debts with various tools, including financial education, budgeting, and professional guidance.

When you meet with a credit counsellor, they review your financial situation and history. Then, they will present you with several options or ideas for moving forward, including creating a comprehensive debt management plan.

This plan helps consolidate existing debt, make payments, and work toward a future free of debilitating debt with a debt management plan.

Additionally, if you have to declare bankruptcy in Canada, you are legally required to attend a minimum of two credit counselling sessions. (For more on declaring bankruptcy in Canada, read this post next)

Get out of Debt

Six signs credit counselling might be right for you.

If debt consolidation and better financial management sound like things that would benefit you, that is one sign right off the bat that credit counselling is worth considering. If you are not sure credit counselling might be right for you, here are six signs you should think about credit counselling:

1. Going in circles

Have you consistently made the minimum payments on your debts, but nothing seems to change? There’s an unfortunate myth that making minimum payments is enough. But it will take more than minimum payments to make progress in paying your debts.

If you have been making your minimum payments but seem to be going in circles and not making progress, this is one sign you might want to consider credit counselling.

2. Using one form of credit to pay down other credit

Are you using one credit card to pay for other credit card debts? Relying on credit to pay credit can get you in financial trouble–and fast. If you’ve been doing this, it’s worth discussing your other options with a credit counsellor.

3. Living off credit

Another sign credit counselling might be beneficial for you is that you live off credit to pay your bills and make ends meet. While this may keep you afloat short term, it is not a sustainable long-term option, so it’s best to figure out your other options before your debts get more significant.

4. Your budget is non-existent

Flying by the seat of your pants does not tend to be a realistic financial option for the long term. Instead, a clearly defined budget based on your income and goals will help you manage your debts and avoid getting stuck.

If you are ready to create a budget that helps you reach your goals (including debt management), speaking to a credit counsellor could be extremely helpful.

5. You don’t have savings

Maybe you are making ends meet, but what if the unexpected happens? Let’s say you suddenly face an unexpected bill in the thousands tomorrow. Would you have savings tucked away that could cover these costs?

Having a savings account provides you with a lot of peace of mind and can also help you avoid getting into serious debt down the road. If you have yet to create or build your savings account, speaking to a credit counsellor might be the right place to start!

6. You don’t know your credit score, or you want to improve it

Whether you do not know where it currently stands or you’re not happy with where it is, working with a Canadian credit counsellor can help you get clear about your credit score and make a plan for improving it.

Credit counselling with Fox-Miles

We understand how exhausting financial stress can be. That’s why we’re here to help you with the solutions you need to move forward. 

The credit counsellors at Fox-Miles will guide you through financial distress and start your journey toward a fresh financial start. Our team helps you correct your current situation while compassionately guiding you to manage your finances best moving forward.

We offer professional and personalized credit counselling services in Edmonton. Schedule your credit counselling appointment today to get started!