Understanding Consolidation Process

Bad Credit Consolidation (Can the Scams)

When you have outstanding student loan debt and bad credit, it can sometimes be tough to find a lender willing to consolidate your loans into a tidy little package. While it would make sense to help out the ‘little guy’ with the big debt by consolidating with a low interest rate, many lenders prefer to work with borrowers who have a great credit history and avoid those who do not.

There are, of course, plenty of businesses that advertise bad credit consolidation loans which are available at a slightly (read: astronomically) higher rate. Intertwined within the legitimate lenders for bad credit consolidation, are scam artists who are out to do nothing more than taking your money and sometimes your identity.

Keep an Eye Out for Bad Credit Consolidation

Nearly everyone has seen the advertisements warning against giving out your personal information to unknown individuals who may not be as legitimate as they seem. People seem not to realize just how vulnerable they are to identity theft and continue to eagerly divulge sensitive information to anyone over the phone or internet.

Since there are so many people who unknowingly give away their identities and money to bad credit consolidation scammers, here is a list of things to keep an eye out for to avoid being hurt by a bad credit loan scam by giving any of your personal information:

• If they ask you to pay for anything before the loan can be processed or approved you better believe it is a scam. No legitimate lender would ask for money (in the form of a processing fee or security deposit) prior to approval. Most loans have fees associated with filing and originating but they are written into the approved loan and the lender does not need to ask you to put any money out up front.
• If they guarantee your approval without credit check or regardless of how bad your credit truly is, run for the hills. No lender with any sense will guarantee even a bad credit consolidation loan without checking out your credit history.
• If they have an address outside of the US, write them off as a lender. When they are located outside of the US they are not regulated by US lender rules and it can be nearly impossible to get your money back.
• If they ask you to wire money to an individual you should avoid the lender. You pay a business for a loan, not a person.

Important to Remember

When you are looking for a bad credit consolidation loan be sure to shop around before you choose a loan. When you find a company you like, call the Better Business Bureau and verify all of their information before beginning the loan process. If you wind up falling for a scam you need to take moves to recover from it. File a police report because this is a crime. File a complaint with the FTC (Federal Trade Commission) and the attorney general’s office in your state. This will register the business as a scam, if it is registered as a business at all.