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You aren't alone, many people get to this point. Once your financial situation gets out of hand, panic and desparation can lead you to searching for fast fixes. There are always people who will take advantage of your situation and make offer to provide you with a "quick fix". The price is usually huge. Some of these "deals" seem so perfect but are really complete scams; others are simply very bad deals. Here are some of these scams that we know and , for your protection, you should be aware of.
Credit Repair Services promise to change a less than perfect credit report to a much improved version for a fee> The fees can be large, usually a few hundred dollars. In reality, no one can remove true and accurate information from your credit report. If you really did default on a loan, for instance, no person or organization can have that erased from your report. Only time and patience can remove negative information on your credit report. No comment can stay on your credit report for more than seven years (except for Chapter 7 bankruptcy, which can remain for ten years).
Most Americans' credit reports have at least one, and sometimes several, error on them. The fact is that lenders are aware of this and will take such discrepancies into account when evaluating your application for a loan. They are primarily looking for any recurring pattern of payment problems, especially ones that began recently. So having some negative history in your credit report will not always damage your ability to obtain new credit.
You can correct errors in your credit report on your own and save the exorbitant fees sometimes charged for this service. If you are denied credit because of negative information in your credit file, you have the right to request a free copy of your credit report within sixty days of your application denial. If you see a mistake in your report, challenge it in writing and if the reporting bureau cannot verify it, they are obligated toremove it. You do not have to have been turned down for credit in the last sixty days. You can also obtain a copy of your credit report for a small processing fee. To learn more about your credit report visit our Credit Reports page by clicking on the credit report icon below.
Beware of any company that states that they'll give you a debt consolidation loan at an extremely low interest rate even if you have a poor credit history, These are almost always fraudulent, illegitimate organizations. You'll be required to send a high one-time processing fee or application fee. That fee is how they make their money and you'llmore than likely never see the promised loan. Often, when you contact them to find out where your promised loan is, you'll find that they have disappeared, or never really existed in the first place. The individuals or groups making the promises are often virtually impossible to track down even with legal assistance.
Payday loans are another "quick fix" trap that manyfor people who are struggling to make ends meet often fall into. The organization offering the loan requires that youshow the lender recent pay stubs, and they advance you cash based on the wage amount. These loans are marketed as short-term loans that are to be paid back on the next payday, or over several paydays. The fees charged are often exorbitant. If you borrow $400 and pay back $50 a week, you may end up paying a total of more than $650.00! If you are unable to make the payment you will be forced to renew your original loan at a penalty of $40-$50 for each occurrence. Considering that debt was a problem when you took out the loan, a Payday Loan can be very dangerous indeed.
Home equity loans are very popular today. In many cases a person with credit debt problems may be tempted to take out a home equity loan to consolidate unsecured debts. The problem is that because this type of loan converts unsecured debts to a secured debt. If you get behind in payments to a credit card company, they don't take back the items you purchased witht he credit card. If you fail to make payments on a home equity loan, your house is at stake. The institution that provided the loan can and will take your home if you don't make your payments.
While loans through finance companies are simialr to loans through a bank, finance companies are not banks. They are in the business of lending money. and have much lower standards than banks. You may be able to get a debt consolidation loan from a finance company, but, because they make loans to so many poor credit risks, you'll pay unbelievably high interest rates often as much as 40%. Most banks are willing to work with you to agree to terms if you can't make your payments, but a finance company loan usually adds harsh penalties if you miss even a single payment. You may also be required to put down your car or some other valuable possession as collateral to secure the loan. This can result in the loss of that posession in the event that you default. Collection department harrassment and wage garnishment are the norm with finance companies.
Debt Cafe can get you a better deal and help protect you. We guarantee it. Contact us today.