Prime Rate Credit

There are many credit services out there that promise to erase or eliminate your debt. Usually, they are offering you yet another credit card without looking into your credit history. Along with a credit card of this nature, there is often a pledge of collateral or security on your part.

Debt consolidation loans are another common offering by credit repair companies. The monthly payment may look appealing if it is lower than the collective amount of your present credit obligations. It is often at a high interest rate and it will take you years longer to pay off your present debt.

Another downside to a debt consolidation loan is that usually you must offer collateral such as equity in your car or home. If you run into trouble repaying these loans and default, possession of your car or home is at risk.

The end result of either of these scenarios is that you will sink further into debt if you go for the extra credit card situation. And if you do the debt consolidation, you will be further into a debt situation for a longer time.

So, consumer beware. Before applying for a debt consolidation loan or second mortgage financing, get as much information as possible. This can be done by writing to “Facts for Consumers,” Bureau of Consumer Protection, Federal Trade Commission, Washington D.C.20580.