Credit Sesame discusses the growing consumer demand for help with credit.
Growing numbers of Americans are seeking help managing credit. The reasons are obvious—debt problems have become a national epidemic. What may be less obvious are the rewards of better credit management.
Getting credit help can do more than get you out of your current debt trouble. It can ultimately leave you better off, with lower expenses and greater peace of mind.
Credit counseling is in demand
Money Management International (MMI) is a nonprofit credit counseling organization. They recently reported a 72% year-over-year increase in people seeking credit counseling. That’s a huge increase and an indication of how quickly consumer debt is getting out of control.
What is credit counseling? It can entail any or all aspects of learning to manage credit more effectively:
- Information about personal finance products
- Help with budgeting to live within your means
- Explanations of credit reports and credit scores
- Education about debt reduction strategies
- Creation of a debt management plan
People often need this kind of help because they struggle to understand financial products and basic money management skills. This is why even people who earn a decent income can find themselves with debt problems. The MMI reported a 73% year-over-year increase in people seeking help among people with above-average incomes.
The need for help with credit is real
People seeking help are being realistic about their financial troubles. Financial statistics indicate that an increasing number of consumers are finding themselves with serious debt problems.
Here are some examples of data in the recent Household Debt and Credit Report from the Federal Reserve Bank of New York:
- Total household debt has reached a record high of $17.69 trillion.
- Credit card debt has been the fastest-growing type of debt over the past year, and it is also typically the most expensive.
- The rate at which credit accounts are becoming seriously overdue has increased for nine straight calendar quarters.
- Young adults, in particular, are having a hard time handling debt, with 18 to 29-year-olds having the highest delinquency rate of any age group.
These statistics show that the growing number of people seeking help means they are being realistic about their difficulties. Being realistic can be the first step towards fixing the problem.
Credit goals and the benefits of reaching them
Here are some of the basic personal finance skills you can get by seeking credit education and how those skills can benefit you:
Keeping up with payments
The monthly flood of bills can get overwhelming at times. One of the first steps is to organize bill payment to make it as efficient as possible. Creating a monthly routine to process your bills can help. Tools like automated bill payment can reduce the paperwork involved and help keep you on schedule.
Living within your means
Budgeting skills help you anticipate expenses so you don’t suddenly fall short. Managing your cash flow is essential to ensuring you have more money coming in than going out. While borrowing can play a constructive role, you should not depend on borrowing to meet routine expenses. Before you borrow, you should budget to see how you will be able to afford the payments.
Getting out of debt
There are various strategies for getting out of debt. Making more than the minimum payments can help you get out of debt more quickly and less expensively. Refinancing and debt consolidation may also be options for making your payments more affordable. Having a clearly defined debt reduction plan can give you a sense of progress instead of feeling stuck in an endless cycle of debt.
Improving your credit score
Improving your credit score can be one way of measuring your progress in handling debt. Increasing your score may also reduce your borrowing costs, making debt reduction easier. Credit monitoring with personalized suggestions can give you the tools and information you need to manage your credit better and hopefully improve your credit score.
Protecting your finances
Getting out of debt trouble is a big step, but it’s not the end of the journey. Another important personal finance skill is learning how to protect yourself and your credit record. It is a good idea to regularly monitor your credit report and know how to address any unexplained changes. It would be best if you also became an educated consumer to choose the most cost-effective financial products. Finally, stay informed so you can be aware of scams that might threaten your accounts.
More people are seeking personal finance help these days, a sign of the serious consumer debt problem in the US. However, those seeking help are making the first move toward solving that problem.
If you enjoyed More consumers seeking help with credit, you may like,
- Tips for understanding your credit score
- 7 credit management resolutions for 2024
- How to build credit
Disclaimer: The article and information provided here are for informational purposes only and are not intended as a substitute for professional advice.
