Now that you understand what debt consolidation is, you should know that there are many ways to do it – and most of them you can do on your own without help from a debt consolidation company. To see a list of those options, see Ben’s previous blog post, “Debt Consolidation Programs.”
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However, those “do it yourself” debt consolidation options are predicated on having a good credit score. If you’re in a position where your credit score is less than 660, then those options won’t be available and you will need to begin searching for a reputable debt consolidation company. Below, we’ll explain how you can avoid scams and find reputable debt consolidation companies that can hopefully give you a debt consolidation loan with reasonable terms.
Tips for Finding a Reputable Debt Consolidation Company
Unfortunately, there are no quick and easy ways to find out if a debt consolidation company is credible, although we have vetted all the ones in our debt consolidation tool (you can also use ReadyForZero’s savings platform to find one). However, there are a few things you can do quickly to find out if a company is not credible. So start up a search of companies and follow these steps.
- BBB: If you find debt consolidation companies that look like they might be good, type their name into the website of . For example, I did a search of debt relief companies in San Francisco and found that only one of 13 was accredited with the BBB, and it wasn’t even rated. In fact, many of the companies weren’t rated, likely due to lack of information. Of those that were rated, not even one had a higher rating than a C and some even had D’s and F’s. You’ll also find information about complaints made by other consumers and even court cases against the company.
- See if they’re registered: Check to see if any company you’re interested in is registered with or . A reputable company will be concerned about maintaining their reputation and will make it a priority to be registered with one of these agencies. If they are registered, see if there is any feedback given on the company.
- Consider going to a nonprofit – but know that it doesn’t guarantee the company will be reputable. In fact, when you go, ask to see their 501(c)(3) certificate. Some companies claim to be nonprofit when they are not and that certificate is proof that they really are a nonprofit. Keep in mind that nonprofits still have to charge for their services in order to keep the business running and you should compare their fees to for-profit companies to be sure that they are lower. Of course, it’s not all about the fees. Whether nonprofit or for-profit, the company you go with should be one that makes you feel comfortable and meets your needs. One more thing: just like predatory companies will claim to be nonprofit when they’re not, some will also claim to be affiliated with a religious faith in order to more easily gain your trust. So just because you see the name of your religion in the name of the company doesn’t mean they’re reputable! As unthinkable as it is, many of these companies are out to do whatever they can to manipulate you. Don’t ever simply trust a name or a warm and fuzzy website!
Red Flags – How to Avoid Debt Consolidation Scams
So let’s say you’ve followed all of these steps and you’re ready to get out there and meet some of these debt consolidation companies. If you’re paying attention then you can learn a great deal about the legitimacy of a company simply based of your interactions with their representatives in person. As there is no way to guarantee a company is reputable, you’ll need to keep an eye (and ear) out for these red flags.