Options to Avoid in Credit Repair and Building
There are multiple options available that make people believe it is a solution
for freeing themselves of debts. One solution you want to avoid is borrowing
money from finance companies. The companies that advances for consolidating
loans and requires that you put your home or car up for collateral are often a
source for getting your in deeper debt.
Most of the companies are offering a
secondary mortgage against your home, and often the interest rates out
outrageous. Most of the companies offer secured loans, but few of them offer
un secured loans. This is not an option for repairing your credit.
Another option you want to avoid is taking out a tax refund loan. This solution
will get you fast cash, but the fees for this type of loan are often high. If
you are getting $800 back in tax refunds, you will probably only get around $700
or $725. Another type of loan you want to avoid is the payday loans. Payday
loans are loans against your pay-check. Payday loans require that you write a
check for the amount of loan to repay as well as the amount that you will pay
the lender for borrowing the money.
Payday loans eventually cost more money than
what you have in the first place, and is not a solution for repairing your
credit. Pawn Shops are also a bad area to start in building your credit. Most
Pawn Shops will take your merchandise, pay you half in some cases of what it is
worth, and give you a certain amount of time to purchase your merchandise back
before they sell. Often there are interest rates on the loans provided by the
business. It is certainly a way to loose all your belongings and halt you from
repairing your credit. We can also take a look at debt consolidation.
debt consolidation is much better than bankruptcy, it is not a solution for
repairing your credit. Most debt consolidation companies drain the restricting
resources by charging fees for the service.
Many of the debt consolidation
companies will pay the creditors minimal balance and put your assets at risk.
Unfortunately most of the debt consolidation companies will charge high interest
rates, or high monthly fees to use their services. The best solution then is if
you have a few extra dollars call your creditors directly and see if you can get
them to negotiate a monthly instalment that meets your expectations.
provide you the time you need to find a solution for getting extra cash to
payoff your debts. In some instances you can negotiate with your creditors and
they may offer a lower amount than you owe so that you can repay the bills. The
downside with getting creditors to accept a payoff for less than you owe, is
that you may be paying the IRS more in taxes.
If the creditor writes off what
you owe, or else settle for a lesser amount than what you owe, it is often
reported to the IRS. Of course it seems like a no win situation when it comes to
repairing credit, and working to rebuild your credit rating, but in the long run
the rewards are sitting waiting for your arrival.
Anytime you make efforts to
repay back what you owe another individual or company, is gainful when your
self-esteem, self-confidence and other essential human necessities are restored.
None of us like to owe money to anyone, but some of us have no choices at times.
If you are not prepared to deal with your creditors on your own, you could
consult with credit assistances that work to help individuals restore their
The United Way is one source that works with your creditors to help
restore your credit. Creditors often prefer to negotiate with respected
businesses rather than deal with individuals or lawyers.
Debt counselors and
Nonprofit Organizations that work to repair credit for individuals will often
help you to decide how much is owed and how much each month you can afford to
repair your credit and build your credit rating. There is always a solution in
credit repair, so never give up!