Credit Consolidation Services are they ripping you off
There are several fraudulant companies doing the rounds at the moment, preying on people who have bad debt problems. These credit consolidation companies prey on the vulnerable and offer what seems to be the answer to all of their financial troubles.
So how do they do it?
They advertise that they can erase your bad credit history or that debt consolidation can easily and quickly cure your debt problems. More often than not you will end up paying very high fees or interest rates for services that are totally uneccessary. Other ways they use are to advertise low cost loans stating that no credit check is neccessary. In many cases though you will have to pay excessive up front fees and there is no guarantee that you will be offered the loan anyway. One of the most common ways that these debt negotiation services work is to offer one large loan to consolidate all of your debts with no credit check required. These are very risky as they often carry exorbitant interest rates and in most cases your home is put up as security.
So what are the warning signs?
Any company that offers to erase a bad credit report if you pay a fee up front and agree to a debt consolidation solution by combining them all into one loan. The only way that you will repair your credit file is by steadily paying off your debts over many years.
Beware of companies who ask for an advanced fee up front with the promise of a guaranteed loan, these are more often than not then refused due to an unforseen technicality. This then renders the advanced fee non-returnable.
The final warning sign and the most dangerous in my opinion is this. People or companies hold seminars and sell kits that say that you can pay off your mortgage or other debts. The kits will will often sell between $300 – $500 and have items that look like checks but are named certified drafts, purchasers are then told that these drafts can be issued in any amount. These items are normally worthless and anybody who pays their bills with these risks being prosecuted for using fraudulent items.
So in conclusion if something looks too good to be true, walk away as you could end up in more serious trouble than you were in the first place.
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