5 Signs You Need Credit Counseling
Managing your money can be difficult, which is probably why more than 30% of Americans are in debt, struggling to make ends meet, or barely getting by, according to the FTC. Whether the issues arise from poor money management skills or a lack of income, the fact remains: many people would benefit from some sort of credit counseling.
Most consumers want to get out of debt but doing so isn’t always easy. Fortunately, there are plenty of good credit counseling services available, and some of them are free. Consider the following 5 signs to determine whether you need to seek credit counseling or not:
1. Your Paychecks Don’t Stretch as Far as You’d Like Them To
If you’re living paycheck to paycheck, it may be time to think about enrolling in a credit counseling program. Bad credit is created during a financial snowball effect that includes paying bills, chipping away at debt, and spending money on everyday purchases. However, according to an FTC survey, nearly half of all adults in the U.S. admitted that they wouldn’t be able to cover a $400 emergency because their paychecks barely cover their existing expenses. Does that sound like you?
2. Your Credit Card Payments Are Usually Late
The Federal Reserve says that America has more than $953 billion in revolving debt and over $3 trillion in unresolved/outstanding debt. The problem isn’t getting credit, it’s managing it responsibly. Making late payments is the worst thing you could do, especially if you’re trying to improve your scores or get out of debt. So, if you’re unable to pay your statement in full each month, it may be time to sign up for credit counseling.
3. You Get Calls from Debt Collectors
It’s annoying when debt collectors call your phone or send letters in the mail. Eventually, the bank will sell your debt to a third party and your credit score will take a huge hit as a result. If you owe money to the IRS, your private bank accounts can be tapped for repayment.
4. You Use Cash Advances a Lot
Cash advances have their merits but using them too much is a clear sign that you need help. The tailspin created by using cash advances can become unmanageable and disastrous, with no grace period for repayments and interest rates that usually exceed 20%.
5. You Don’t Know Your Credit Situation
Even if you spend money wisely and repay debts on time, it’s important to know what your credit report has on it. Not knowing your total debt can be dangerous. In fact, identity theft most commonly happens to people who don’t look at their credit reports often enough.