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Some of these debt consolidation companies are legitimate; according to the Consumer Financial Protection Bureau, however, others are incredibly risky.
That’s because some may be debt settlement companies that convince you to stop paying your debts and “instead pay into a special account,” the CFPB warns.
Not paying creditors will also show up as a negative transaction on your credit report that makes it harder to borrow more money.
And then there’s the risk of increasing your debt if you fail to make your payments under a debt settlement program.
There are several different types of consumer debt.
However, the most common debts are credit card debt, medical debt, and student loans.
A tip for Mom and Dad: If your kids ask you for a loan — for debt consolidation or any other purpose – even if you can easily afford the requested amount — take a good, hard look before you agree.
If you do go for it, keep it as professional as possible.
If the bank’s terms are not to your liking, there’s no reason to have its inquiry show on your credit report.
These days, while you can still get personal loans from banks and credit unions, there are generally lower-rate options, such as the ones we have been discussing.
The rates are better when the loan is secured, and you’ve been a bank customer for years than when the loan is unsecured and given solely against your good name. Remember, don’t hesitate to ask your bank or credit union to give you a better deal if they want to keep your business.
Not only will you be bailing out your children at an important time in their lives, but you’ll also be giving them an excellent borrowing experience.
In the days of yore, when people needed a hand catching up on their bills, they strolled into the neighborhood bank, spoke to branch manager, shook hands on a loan, and got a check for the amount they needed.