If you have bad credit, the chances are good that you’d do just about anything to improve it; and that might include seeing a credit repair, or a debt consolidation, company. When you’re trying to improve your credit, these can seem like good options and solid paths to finally being able to achieve financial freedom. But there are a few things to be careful about, and that includes credit repair scams.
Credit repair scams work very simply. A company promises to speak with your creditors and pay off your creditors, all under the umbrella of a debt consolidation loan that you will then pay back each month. Customers do need to be aware that when going with an honest company, interest rates are still going to be quite high, due to the high risk of the borrower. Still, they can be a good option. Except that when credit repair companies are working scams, they leave the consumer in the worst position possible. Credit repair scams still promise the customer all those same great things; but instead of paying off the debts first, the company does nothing except collect money for the “loan.” Once the individual understands what’s going on, they find out that they’ve been paying money to someone for no reason, and they’re still left with all their prior debt.
There are a number of ways to avoid credit repair scams, but there’s only one that’s fail-proof and unfortunately, it’s only available if you have a home with a bit of equity built up in it. Home equity lines of credit in Canada and home equity loans can both provide a great way to pay off your debt; and they both work even more simply than debt consolidation or credit repair loans. Borrowing against your home equity gives you the money to pay off your debts and often, even give you a little leftover so that you can tend to that home renovation project, or buy that car you’ve been needing. Even better, loans that are applied against your home equity come at a much lower interest rate than even the most honest debt consolidation company can offer.
So what do you do if you don’t have a home to borrow against? Be diligent about paying off your debts, lay out a budget, and most of all, don’t exceed that budget. Of course you can find tons of tips on how to talk to creditors and get your interest rate reduced (many of them right here on this blog,) that will help the process move along a little more quickly. But in most cases, when you’re looking to repair your credit, the honest truth is that the only person that can do it for you – is you.
