Consumers looking for mortgage and auto loan advice might be told that settling an outstanding debt with a creditor can be a good way to rebuild bad credit. This is true, but borrowers need to be careful in seeking the help of an outside agency.
Previously, credit counseling and debt negotiation were almost completely unregulated, meaning many consumers were taken advantage of with little resource. The standard practice for many of these fraudulent companies was to charge an up-front fee for their service and then never deliver on the promise.
However, thanks to new federal guidelines, these agencies will no longer be able to charge an up-front fee before any service has been performed. The new rules don’t take effect until October 27th, so it may be advisable for borrowers looking to settle their debt to wait until they can be sure they won’t be swindled.
Consumers who successfully negotiate a debt settlement can end up paying less and may eventually get their finances back on track. However, those with a poor credit history shouldn’t assume that their low score precludes them from qualifying for car loans. By applying online, a borrower can learn about what types of interest rates they may qualify for.