Does credit counselling affect credit score?

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Credit counseling won’t hit your credit score unless you opt for a debt management plan (DMP), which results in an R7 rating. This lingers 2-3 years post-completion, with debts visible for 6-7 years. Comparing, a consumer proposal also gets you an R7, while bankruptcy slaps you with an R9 for 6-7 years. Got questions? Reach out via phone, text, or live chat. Not all trustees can be trusted.

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Credit Counselling Credit Score Question

Does credit counselling affect credit score? I’ve heard mixed things about credit counselling and its impact on credit scores, so I want to understand the real effects.

From: Anonymous Question
Location: Edmonton, Alberta (AB)
Category: debt management plan

Credit Counselling Credit Score Answer

Credit counseling on its own doesn’t mess with your credit score—unless you dive into a debt management plan. The first chat about advice or budgeting? No credit report entries there, so breathe easy. But if you go for the DMP, expect an R7 rating on your credit report that lingers 2-3 years after you wrap up. Each debt in the DMP gets tagged as part of a repayment plan, sticking around for 6-7 years from when you first defaulted. Now, stack this up against other options: A consumer proposal also hits with an R7 but doesn’t sting as much, while bankruptcy lands you with an R9, sticking there for a hefty 6-7 years.

From: Insider Adam

Office of the Superintendent of Bankruptcy (OSB) Answer

Credit counselling itself does not directly affect your credit score, as it does not appear on your credit report. However, if you choose to enter into a formal debt management plan through a credit counselling agency, this may be reported to credit bureaus and could potentially impact your credit score. The effects would depend on how creditors report your information and how you manage your payments moving forward. To better understand specific implications, refer to the relevant sections in the Bankruptcy and Insolvency Act (RSC 1978, c 11) and related regulations.

From: OSB Helper

Related Questions to Credit Counselling Affect Credit Score

Here are the top 5 frequently asked questions related to the impact of credit counselling on credit scores, based on common concerns and search trends:

1. Does credit counselling affect my credit score?

Yes, enrolling in a debt management program through credit counselling will negatively affect your credit score.

2. How long does credit counselling stay on my credit report?

Credit counselling history remains on your credit report for 2-3 years after the debt management plan is completed.

3. Will credit counselling prevent me from getting new credit?

Yes, being in a credit counselling program can make it harder to qualify for new credit while you are repaying the debt.

4. Is credit counselling worse for my credit than a consumer proposal or bankruptcy?

Credit counselling is generally less severe than a consumer proposal or bankruptcy but still has a negative impact on your credit score.

5. Can I rebuild my credit score after credit counselling?

Yes, you can rebuild your credit score after completing a credit counselling program by maintaining good credit habits and making timely payments[1][3][5].

If you have a question about debt see our debt questions or ask your own debt related question.

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