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Don’t Pay For Mortgage and Credit Repair

With so many people facing mortgage strain, credit crunch, and general economic stress, mortgage assistance and credit repair places are popping up all over. Some of these places really are legitimate. Unfortunately, there are a lot of groups out there which are scams or will charge you large sums for services you could have gotten at nonprofits.

Two Warning Signs

1. They charge for the service. Many credit and loan counseling agencies out there are run by nonprofits are charge little or nothing for their assistance. Before paying, look into other options. At best they’re simply charging for what you might get elsewhere for free. At worst, they’re a fly-by-night scam.

2. It sounds to good to be true. If a group offers to repair your credit in a few months, or get payments on your $350,000 mortgage down to $200/month, or eliminate your credit card debt–and they charge–run away. It is possible to negotiate with credit card companies, mortgage companies, etc, for lower payments perhaps even lower interest rate. And counseling can help you out with that. But if what they’re promising sounds too good to be true, then it probably is.

Neither of these signs is conclusive proof that something wrong with the group. But they’re both good reasons to look elsewhere. You can also check out any group at the Better Business Bureau and you should be able to find out if others have reported problems. But lack of an entry/complaint doesn’t prove legitimacy.

Four Non-Profit Options

CNN recent suggested four non-profit options for people facing mortgage/credit/financial problems:

1. The Homeownership Preservation Foundation. As their name suggests, this group is primarily concerned with helping people pay their mortgages. You can call 1-888-995-HOPE (4673) and get a counselor who works with you as long as you need.

They can also assist you in finding resources and groups for other financial issues, so if you’re worried about credit card debt and other options aren’t working out, give them a call.

2. SCORE. SCORE provides financial counseling to small businesses. While you may not think of yourself as a small business owner, you might qualify in some fashion. For example, if you’re a SAHM who tutors or you earn part of your income through blogging, you may be eligible. They have options to meet in person and counsel by e-mail.

3. Avvo. Avvo.com offers free legal advice from actual, vetted lawyers. You can post questions and often get several responses. So if you’re wondering whether an old debt still needs to be paid, or whether what someone told you about credit collection is true, you can find out. It’s a great alternative to Yahoo Answers, message boards, and blogs.

4. Credit Unions. Many credit unions offer special assistance for their members. Since credit unions can be found all over the US, you can try finding one in your local area and asking what they offer. It might be worth joining.

Other

You may be able to find more options in your area by asking your church or religious organization (preferably someone in leadership who can recommend a place which has helped other members), your bank, your local Better Business Bureau site. The first two might even offer credit counseling. The BBB for my area has a directory which allows you to find organizations in a category and check out their rating.


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squawkfox » Hooters, Owls, and Woots Oh My!
October 18, 2008 at 4:20 am

{ 5 comments… read them below or add one }

Mr. ToughMoneyLove October 17, 2008 at 11:35 am

Mrs. Micah: Gosh I hope people read this great post and avoid the credit repair vultures. (I am also pleased to not see any Google adsense ads for them on your site!)

Jeff@MySuperChargedLife October 17, 2008 at 2:22 pm

It is sad that there are organizations that will take advantage of people when they really need help. I like to think that it is possible for most people to solve their own money problems by applying sound advice like that offered by Dave Ramsey and others.

Dad October 17, 2008 at 6:14 pm

I’m glad you provide known service organizations that people can consult because there are horrible scams out there. If you see that your in trouble don’t wait for the creditor to call you and ask for payment. Get help quickly. Sometimes it is worth asking the creditor for help. At a certain point they are more interested in what they can salvage. The earlier you take action, the better the situation will be. No matter how bad it is, waiting makes it worse. There are credit counseling groups both from non-profits and referrals from banks that will set up workable payment plans. There has also been a lot of good advice found here and related blogs on how to take on your debt. There are a bunch of good strategies I’ve seen around here that help you bring it under control. If you find it is more than you can handle, then you probably should seek counseling before get further over your head.

Ray The Money Man October 17, 2008 at 8:06 pm

Reading this post I couldn’t help but think how relevant it would be to replace the word “people” with the word “our government”. Just think is our elected leaders could follow these simple guidelines?

Great Post!

Fraser January 8, 2010 at 8:30 am

Why do scammers hit this group, used to be a time when it was the rich or greedy that got conned. Could be were all poor now!

Experian or Equifax will correct inacurate information for free, get your report from them and see.

The only way to improve your credit is, if you can get any, pay on time

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