A debt consolidator can be instrumental in helping eliminate debts, but your financial difficulties may not end there. If you don’t understand how you came to acquire too much debt, you may find that you are living under similar circumstances in a couple of years. However, people in this situation can benefit from consumer credit counseling.
Are You Carrying Too Much Debt?
When you enroll in credit counseling, you will receive an education on how your credit scores are calculated. How much credit is in use at a given time constitutes 10 percent of your credit score. If you have five credit cards and you have used 100 percent of the credit available to you, this lowers your credit scores because it shows that you are carrying too much debt.
A credit counselor will help you understand that the best scenario for you is to only have 10 to 30 percent of your credit in use at one time. Some people use more than 30 percent of their credit because they intend to pay the entire bill in full at the end of the month. Your counselor will help you understand that this can lower your scores even though you will pay the bill in full without leaving a balance. If you are carrying too much debt, a debt management program with a company like Creditguard can help to set a payment schedule and move forward.
Are You Charged Up to Your Credit Limit?
You may have needed help with debt because you had several debts to contend with at once. How much outstanding debt you are carrying constitutes 30 percent of your credit scores, so you will need to make sure that you don’t take on too much debt in the future. Your counselor can help you set up a budget so that you are not in danger of spending more than you earn.
Have You Paid Your Bills On Time?
Your payment history makes up 35 percent of your credit scores, and it is the most important determinant of a high or low score. If you have paid your bills late or you have defaulted on a loan, your credit scores will reflect this reality by being very low.
To be informed about all aspects of credit, enter into consumer credit counseling today.