Do credit repair and loan consolidation work?

Senai Haftu

Nov. 24 2008

The financial crisis threatening the world economy these days started about two years ago when the banks in the USA and elsewhere started lending money to any one without checking carefully to see if the borrowers can make payments successfully.

They have a name for it, it is called subprime mortgage crisis. The subprime mortgage crisis is a huge financial crisis triggered by a rapid decline in housing prices and everything that was connected to mortgage payment failure and foreclosures in the United States. This caused a domino effect across the financial markets throughout the world banking systems. This in effect caused investments related to housing prices to go down fast putting the well being of the financial institutions in a greater risk.

As a result of this, many people throughout the world lost their houses and the number of foreclosures sky rocketed. The banking system became fragile and many of them were bankrupt or their governments are trying to rescue them.

Many lives are destroyed as a result of the financial crisis and most people are desperate to save their houses and their investments. They will do whatever it takes to get out of this financial mess. Desperate people take desperate measures. That is where we come to another ugly problem, credit cards.

The financial crisis is not limited to housing; it is all over the economy from the price of gasoline to the price of food. The price of everything is at all time high and people are using their credit cards like never before. Many people have maxed their credit cards and a lot of them are not making any payments ruining their credit and credit scores. When you have a bad credit score or you are delinquent on your payments, the doors to banks, credit unions and other lenders slam shut in your face.

There are companies and individuals preying on this desperation taking advantage of peopleís financial problems. They promise people they will fix or repair their credit report so that they can get a loan to buy a car, insurance, home mortgage and even to get a job if they pay huge fees. They also offer loan consolidation, bill consolidation, business debt consolidation, federal direct consolidation loans, student loan consolidation and other debt consolidation plans. Most of these companies and individuals making these false promises are scammers. There is no easy or quick fix for bad credit history or credit report. You can improve your credit report but it takes time, self discipline and lots of hard work. If you try to take the short cut to repair your credit report, most likely you will end up in more crisis than before.

Donít fall victim to those who are lurking in the shadows waiting for you to slip and will pretend to help you get up. They are not there to help you with your financial crisis or repair your credit report; they are trying to take advantage of you when you are most venerable and desperate.

The following are things you can do to identify the good ones from the scammers:

  • Do not pay any money for any service before hand.
  • The company or individual did not tell you your rights and what you can do for free by yourself.
  • The company or individual tells you not to contact any of the three major national credit reporting companies directly.
  • The company or individual tells you to lie or create false identity.
  • The company or individual promises to fix everything regardless of its accuracy.

When you are dealing with a company or individual about your credit report you should pay close attention to the above points. If it sounds too good to be true it probably is.