A reader: I got a letter in the mail yesterday from a company out of Memphis, Tenn., claiming that they could consolidate my credit card debt and I could make one payment and save a large amount of money in interest paid. Is this for real?
Action Line: Refinancing can be a good way to lower your interest rate. However, you need to be careful that you are refinancing with a licensed and reputable financial institution.
Before you agree to work with a particular financial group, check them out with the California Department of Business Oversight, www.dbo.ca.gov to make sure they are properly licensed and accredited. You can also check with the Better Business Bureau to see if there is a history of complaints involving the organization.
Refinancing usually saves you money every month, making your budget easier to handle. It can also potentially save you hundreds and perhaps thousands of dollars in interest payments by the time your entire loan is repaid.
It is possible you may have difficulty taking advantage of the best refinancing options if you have a history of late payments. Most reputable financial institutions require very good to excellent credit in order to receive the lowest interest rates when refinancing. Check your credit report at www.annualcreditreport.com before you get started. Make sure that all of your credit information is accurate. It’s free once a year to all.
Make sure you are totally upfront and honest with any potential lenders about the current state of your credit history. They will find out anyway and it’s always better to be forthright and honest.
The Better Business Bureau advises cash-strapped individuals and small business owners to recognize the red flags of an advance fee loan scam:
▪ The lender has a bad reputation – or none at all. Research the lender thoroughly online and with your Better Business Bureau. Most trustworthy lenders have an established track record; be wary if you can’t find much information about the lender online.
▪ The lender is not registered in your state to do business. Check with your state financial or banking regulators.
▪ The lender asks you to wire money or send a money order – such as for insurance or collateral – before you can receive the loan. You might be told to wire money to another country; consider this yet another red flag.
Scammers preying on consumers looking for loans is not a new idea. When people are struggling financially it makes it easier for scammers to be successful. So before you respond to those unsolicited letters that you get via the U.S. Postal Service or email, before you respond to an ad in the paper or online, check out the company and the offer thoroughly. Make sure they are licensed. Make sure they don’t have lots of complaints. Read and understand anything in writing completely, before you give anyone any of your credit information, any money or a signature.
Action Line is written by Blair Looney, president and CEO for the Better Business Bureau serving Central California. Send your consumer concerns, questions and problems to Action Line at the Better Business Bureau, 4201 W. Shaw Ave., Suite 107, Fresno, CA 93722 or firstname.lastname@example.org.