Debt Counseling Services – Signs its a Scam

Whether someone is offering you debt consolidation services, debt management, a credit card application or just trying to get you to sign up for a free credit report its important that you pay attention to the details. Here are a few different scenarios.

• The ad assures you that there will be no credit check. Any legitimate company is going to want to see your credit report, even those that lend money to people with less than perfect credit.
• You have to call a 900 number to apply.
• The ad absolutely guarantees that you will be approved. No legitimate company will do that. This is a double warning sign if the ad specifies that you are absolutely approved for a large credit limit such as $2,500.
• The card is offered by a company that claims to be in the business of credit repair, especially if the name implies that it’s a not-for-profit operation. The real credit repair agencies are more interested in getting people out of debt, not into debt.
• Any offer that prompts you to say, “Wow! That sounds too good to be true.” You know the old saying about that. This is another one of those situations in which you should listen to your gut.

Even legitimate credit companies sometimes offer useless services.

For example, some companies offer “credit insurance,” to protect your card in case it gets stolen. The offer assures that you would not be responsible for any bogus charges if you notify the company right away. Sometimes, the company will offer this service free for three months but then charge you a monthly fee, which it will helpfully take by hitting your credit card automatically.

The problem is that under federal law, you are protected in the event someone steals your card for any purchase over $50, if you notify the company right away. Many companies will forgive that $50 anyway.

Another worthless service is credit disability insurance. Again, the idea sounds good. If you are disabled, your minimum payments are covered until you can get back on your feet.

Once you do get some credit, use it wisely. Resolve to never again get in the position of waking with cold sweats or letting the answering machine pick up because you have no way to pay your bills. Debt consolidation or debt management companies will be wanting to speak with you soon.

Your best friend right now is your good common sense. You know now how easy it can be to get in over your head. You know that nothing you buy on a whim will bring you more pleasure than a savings account and little or no debt.

I’m reminded of that great Jimmy Buffett song, “Permanent Reminder of a Temporary Feeling.” He was talking about things like tattoos, but he could just as well have been talking about having huge credit card balances with nothing to show for them. You know from your own experience how easily that can happen and how stupid you feel later on. If you’re not careful you could find yourself calling a debt consolidation company to help resolve the thousands of dollars in debt you have.