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Benefits of Financial Counseling
Individuals put in hard work at the learning institutions and work places in order to better their finances presently or in future. A sound financial health enables people to meet and exceed their basic needs. The excess funds are used for investment and wealth generation. To many middle and low income earners, finances never seem to be enough. When one assumes they have it all together and emergency or urgency takes place. This may be inform of home repairs, hospital admission, accidents, and tuition fee to mention but a few. All these needs require extra financing to resolve. Many individuals result to borrowing to take care of various financial needs in their lives. This article will deliberate on the benefits of getting sound financial counseling.
Every person needs extra financing at some point. Some people borrow in order to resolve short term financial needs. Others borrow to invest in their business ideas or in real estate property. Regardless of your financial needs, it is advisable to consult a finance counselor to advice you appropriately. The first thing to consider when one is preparing to borrow funds is their credit score. The credit score is an instrument that lenders use to determine a person’s ability to repay a loan. Financial institutions do not know their borrowers at a personal level. So they use credit scores to determine a person’s credit worthiness. People with average and low credit score are consider high risk borrowers. They are therefore denied loan facilities or charged high interest rates. A sound financial counselor advises clients on how to repair their damage scores or how to maintain high scores.
Many people go for long and short term loans from lenders or established financial institutions. This loans are in form of mortgage, student’s loans, payday loans, investment loans, emergency loans and overdrafts. Different loans require the customer to meet different thresholds. Lenders are more concerned about credit scores when it comes to extending loan term loans and mortgages. Nonetheless, this is not the only thing they put into consideration. They also look at the level of income and loan collateral. Financial advisers direct their clients on how to repair their scores and improve their financial statements in order to get certain long term loans.
Financial counselors also advice their customers on the implication of taking certain loans. For instance, some student’s in the higher learning institutions borrow student’s loans just to have extra money for upkeep. They use this money to have fun and live large. What such students do not comprehend is that this loans take decades to repay and constrain a person’s future income. A financial counselor can advise a student on how to budget and live within their means. The advisor will also guide students on the level and type of borrowing they should go for. When it is time to repay such loans, a student will be advised on the best repayment plan. For example, a borrower can negotiate with a lender who offers better terms to buy off all his or her loans from costly lenders. The borrow will then repay their debts at favorable and more manageable terms.