 |
 |
 |
 |
 |
 |
 |
 |
 |
 Beware of quick fixes! Once you get overextended, panic soon turns to desperation. And, as always, there are people who will take advantage of your desperation to offer you a "quick fix" -- at a price. Some are outright scams; others are simply bad deals. Here are a few of the ones we know about. Credit repair services These organizations promise to clean up your credit report for a fee, usually a few hundred dollars. This is a scam because no one can remove true information from your credit report. If you really did miss several payments on a credit card, for instance, no one can get that fact taken off your report. Only time will accomplish that. No comment can stay on your credit report for more than seven years (except for Chapter 7 bankruptcy, which can remain for ten years). It's true that most Americans' credit reports have at least one error on them. However, lenders are aware of this fact and take it into account when evaluating your suitability for a loan. What they look for, primarily, is a pattern of payment problems, especially fairly recent ones. So having a couple of negative remarks on your credit report will generally not affect your ability to obtain credit. Furthermore, you can correct errors in your credit report on your own -- for free. If you are denied credit because of information in your credit file, you are entitled to request a free copy of your credit report for up to sixty days after you've been turned down. If you see something untrue on your report, you may challenge it in writing and if the reporting bureau cannot substantiate it, they must remove it. If you haven't been turned down for credit in the last sixty days, you can still get copies of your credit reports 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. Guaranteed loans Any company that claims they'll give you a debt consolidation loan at a ridiculously low interest rate, regardless of your credit history, is almost certainly not a legitimate business. You'll be asked to send a one-time processing fee or application fee, usually at least $200 but sometimes more than $500. Of course, that fee is all they're really in business for, and you'll never receive the promised loan. By the time you call them to find out where your loan is, they'll be gone. While these outfits market heavily in the U. S., they often operate in some other country, making it virtually impossible to track them down. What's truly sad is that many desperate people have borrowed money from friends or family, or taken a cash advance from their credit card, to pay the fraudulent fee. Then they're deeper in debt with nothing to show for it. Payday loans Payday loans can be very tempting for people who are struggling to make ends meet. You show the lender recent pay stubs, and they advance you cash. The intent is for this to be a short-term loan, which you will pay back at your next payday, or over several paydays. The problem is that the fees charged are often exorbitant. If you borrow $200 and pay back $50 a week, you may end up paying a total of more than $350.00! And if your unable to make the payment you be forced to renew your original loan at $40-$50 for each occurrence. Clearly this is no kind of deal. Home equity loans If you own a home with significant equity, you may be tempted to take out a home equity loan to consolidate your unsecured debts. This may be a bad idea because it converts unsecured debts to a secured debt. If you fail to make payments on a credit card, usually your creditor can't take away the stereo you bought with the card. But if you fail to make payments on a home equity loan, you could lose your house. That's because a home equity loan is simply what banks used to call a "second mortgage" under a different name. Finance companies Like banks, finance companies are in the business of lending money. But their standards are much lower than those of banks. The good news is that this means you may be able to get a debt consolidation loan from a finance company. The bad news is that, because they make loans to so many poor credit risks, you'll pay unbelievable interest rates -- sometimes up to 40%. And while banks are willing to work with you to make other arrangements if you can't make the payments you agreed to, a finance company loan usually includes harsh penalties if you miss even a single payment. You may be asked to put down your car or some other valuable possession as collateral, and if you default, you may lose that possession. You will find yourself constantly harassed by their collection departments and may have your wages garnished. We can get you a better deal. We guarantee it. Thanks for visiting us today! We welcome your comments.
|
