Consumers who use Credit Counselling services outperform average Canadians
08 Jul, 2013, 08:02 ET
TORONTO, July 8, 2013 /CNW/ - The efficacy of Canada's not-for-profit credit counselling services industry is indisputably positive. "Based on credit bureau research involving debt-ridden consumers aided by our services, there can be no doubt that not-for-profit credit counselling is good for Canadian households and is beneficial to our national economy. We now have hard data showing that our time-honoured credit counselling services provide superior, trustworthy ways for Canadians to beat bad debt and regain strong and balanced financial footing," said Henrietta Ross, CEO of the Canadian Association of Credit Counselling Services (CACCS).
According to research findings, previously overindebted individuals who successfully complete a voluntary credit counselling Debt Management Program (DMP) become far more credit risk-friendly. "Equifax Canada analysis shows that consumers who have successfully completed a Credit Counselling Program through an accredited not-for-profit agency demonstrate a significantly improved credit score and lower delinquency rates compared with average Canadian consumers," says Paul Le Fevre, Director, Operations, Equifax Canada.
The research data included more than 1,600 Canadian consumers who completed a credit counselling DMP in 2010, and whose credit worthiness was subsequently analyzed at year's end in both 2011 and 2012. The research was informed by the Equifax Consumer Risk Predictor score (CRP), a risk assessment tool based on more than 400 consumer credit file attributes and that predicts the likelihood of 90-day past due credit delinquency within the next 24 months. As part of their lending criteria, credit grantors can use this type of score to assess a consumer's credit risk. Low scores, below 500, indicate unsafe risk due to very serious credit issues while mid-range scores between 575-649 reflect an above average risk profile, the safest risks for lenders ranging from 750-900.
Prior to completing the credit counselling DMP, consumers in the control group reflected mostly high risk scores of below 560. But after completing the DMP - and by the end of 2011 - consumers significantly upped their CRP average to 627 (indicating an above average risk profile) and their credit performance continued to improve reaching 636 at the end of 2012. Consumers who repay their debt using a DMP are almost two times better - practically doubling the odds - in relation to being a good credit risk when compared to Canadians who did not use credit counselling services.
Ross went on to say, "This study shows that individuals and families want to improve their financial management skills - they want to learn how to manage their money better. CACCS members help them do exactly that - whether through DMP's or the extensive financial education programs we provide nation wide, while working in league with financial institutions, local schools and communities, the provinces, and the federal government". She further emphasized that "By helping Canadians reinvent themselves financially, consumers can benefit from a healthier lending environment in Canada."
About the Canadian Association of Credit Counselling Services:
The Canadian Association of Credit Counselling Services (CACCS) sets the standard for the not-for-profit financial counselling industry. CACCS members provide Canadians with unbiased and confidential services that include education about the fundamentals of money management and budgeting, personal financial assessments and help to find solutions to indebtedness and money problems. CACCS is also committed to national research and policy initiatives concerning personal finance and industry advocacy. Visit www.caccs.ca for more information.
SOURCE: Canadian Association of Credit Counselling Services
For further information:
Henrietta Ross 905 945-5644 ext. 222 [email protected]
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