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What do you think of credit counseling?

A couple of years ago, when I was home on maternity leave, and my credit card debt was somehow about half of what it is now, I called a credit counseling agency to see if they could help me manage my debt.

Despite all my silly mistakes with my overactive spending habits, I always managed to keep my head above water. I always made my payments on time, minimum payments at the very least. I was (and still am) obsessive about checking my balances and watching due dates and paying attention to any promotions that come in the mail for my credit cards. With a lot of love and hard work, my credit score was, and still is, quite good.

The credit counselor told me that I have something called an R1 rating, and the advice he gave me was to stop paying my credit cards for a few months. When the red warning letters started coming in, I was to contact the credit counseling agency again and let them handle it from there. He told me, after much questioning and prodding on my part, that this course of action would immediately bring my R1 to an R7. When I told him I didn't think this was such a good idea, he told me that within three or four years my credit would be back up to an R3 or R4, and from there I would have nowhere to go but up.

I was doubtful, but I accepted the email application and told the counselor I wanted a few days to think about it.

A quick search on the internet didn't help, because of the huge number of these types of agencies, which only make it look like a good thing. I called my Dad, who has experience in bankruptcy and consolidation, and he didn't know what to tell me. I slept on it for a few days, and my gut told me that I shouldn't jeopardize my excellent credit, something I had worked so hard to keep no matter what was going on in my life.

Even though I can't yet buy a house and I require a co-signer to get a loan or extend my line of credit, I know I am now better off for letting the credit counseling go. It was a hard decision, because I was so tempted to just not make the payments and put the money away instead. I really want to save up for a down payment for a house. But I will need my excellent credit for that big purchase, and I will never purposely jeopardize that.

What do you think of credit counselors? Do you think I made the right decision?


  1. Anonymous11:46 PM

    I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.


  2. Thanks for your comment. Your feedback is much appreciated.

  3. I was a credit counsellor.

    When considering credit counselling, be sure to go to a Non-profit agency. Non profits are regulated by Credit Counselling Canada (if you're in Canada). Your credit rating is only affected if you decide to embark on a debt management program through credit counselling. With a debt management program, the credit counselling agency approaches your creditors and asks for a reduction or elimination of interest charges. This is what results in an R7 rating. (ratings go from R1 - R9). You want to preserve your credit rating if possible. Non-profit credit counsellors can also offer valuable budgeting advice as well as advice on negotiating with creditors on your own. Simply going to an office for an initial appointment has no effect on your credit report.

    Sorry my comment is so wordy! Maybe I will write a post about credit counselling!

    You have a great blog!

  4. Thanks for the advice, and the compliment :)

    I've been enjoying your blog as well!


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