What are the effects of credit counselling on your CIBIL score?

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CIBIL score, based on your individual financial situation and how you make use of these services. By and large, credit counselling can be a valuable resource for borrowers who are keen to improve their financial literacy. It is important to note that there may be short-term impacts on your credit score, the long-term benefits of debt repayment can outweigh any transient shortcomings.

Also, it’s important to opt for a reputable credit counselling agency and carefully examine the advice they give. Here are some impacts of credit counselling: Debt management plans: The credit counselling agency may recommend you to enrol in a debt management plan, or DMP. Under this, you are told to make monthly payments to the credit counselling agency, which then distributes the funds to your creditors according to an agreed-upon plan.

As you are enrolled in a DMP, there might be a neutral or slightly negative effect on your credit score. However, after making consistent payments through the DMP, your credit score may improve gradually. ALSO READ: Can you improve your CIBIL score in a month? MintGenie answers Financial education: Credit counselling typically involves sessions where you receive guidance on managing your finances, creating a budget, and developing strategies to repay debt.

Implementing the advice provided by credit counsellors can lead to better financial habits, which may eventually improve your credit score. For instance, if you learn how to budget effectively and make timely payments, it can impact your creditworthiness in a positive way. Credit inquiries: When you seek credit counselling, the agency may review your credit report as part of the evaluation process.