How To Validate A Credit Consolidation Company

When looking into a credit consolidation company, there are a number of things you need to know and ask. There are a number of credit consolidation companies out there that differ remarkably so it is important for you to be able to recognize a good company from the credit consolidation scams.

Track Record, Rating, and Accreditation

Look at their track record and business standing. Obtain testimonials from customers so you can hear firsthand about how the company works. Find out if the company is recognized by the Better Business Bureau and what their rating is. Many people prefer to work with non-profit credit consolidation companies because it usually saves them money, but if you go this route, check that they have a 501c3 that verifies their non-profit status with the IRS.

What Services And Deals Are Offered?

Your validation doesn’t stop at making sure they have a legal operation. There are a number of ways that a credit consolidation company will handle your credit debt. More often than not, your old payments will still need to be made, but you will be paying the credit consolidation company a single check each month and they will take care of sending the various payments out to whoever you owe money to. If this is the case, find out how directly they deal with the various collectors you need to pay.

Also, make sure that they work out an agreeable deal to reduce the interest rates on your payments from these collectors. Some credit consolidation companies advertise that they will reduce the amount you owe, but this often results in lower FICO scores. A company that fails to reduce your interest rates is one of the first signs of credit consolidation scams.

Other services commonly offered that you should check for are budget counseling and credit consultation. Often, a free consultation will be offered before signing up for anything, and if they are asking for you to pay just for the consultation, you should be wary. Also, make sure that this consultation isn’t just for them to review your records for consolidation purposes; they should also be advising you on ways to reduce regular monthly expenses outside of your debt.

Debt Consolidation Loan Companies

A common practice recently has been that, instead of arranging to make your payments for you with you sending them a single check each month, some companies will actually give you a loan in the amount of your debt to pay it off, and then you can pay them for the loan each month with a single payment. This way, your debt is erased immediately, and you only have a single, low interest loan to worry about. If you don’t want to put up any collateral, some lenders will even issue unsecured debt consolidation loans.

View all 3 of your FREE Credit Scores

blog comments powered by Disqus