6 Useful tips to avoid credit consolidation scams

US credit card debt has increased by 14% in 2010 as compared to 2009. Several consumers are looking for debt help with credit consolidation. The financial institutions offering credit consolidation are competing to bombarding mails and advertisements to attract customers. But how can one tell which credit consolidation service is genuine and which is a scam? Read on this article to know about some tips that can help you avoid credit consolidation scams easily.

Tips to avoid credit consolidation scams
Credit consolidation scams are rampant nowadays. An increasing number of customers have lost their hard earned money to these scams and their debt problems have increased manifold. Here are some effective tips that can help an individual avoid credit consolidation scams:

1 . Do extensive research on a financial institution offering credit consolidation

It is essential to check the credentials of the financial institution/organization offering credit consolidation. You should always work with a legitimate organization. Your State Attorney General can tell whether or not a particular financial institution offering credit consolidation is legal.

2.Better Business Bureau (BBB)

You can also check the reputation of the particular institution with Better Business Bureau (BBB) and Federal Trade Commission (FTC). Visit the website of BBB to know about the number of unresolved complaints filed against the institution by consumers.

3 . Don’t divulge your private information

Beware of those financial institutions that ask you to divulge personal information such as social security number and bank savings account number. You might as well know that consolidators only need to gather information on your creditors’ names, interest rates of the outstanding loans, etc.

4 . Get to know about the extra fees

Credit consolidators may suddenly ask you to pay a fee in the midst of their service. Hence, it is essential to know about the extra fees from the very beginning. Usually, the consolidators charge 10% more than what they send to the creditors.are getting into. One should read the fine print section carefully as hidden fees are often written there.

5 . Take a step back and think

Always remember that the consolidation companies are here for business and not for charity. Consolidators will try to lure you sign the sign the consolidation program. You should not enroll in a credit consolidation program straight away after hearing one. Take sometime prior to enrolling in a program.

6 . Read the fine print section of the contract

As the verbal agreements are not legally binding so it is essential to ask for a written contract. One should read the terms and conditions of the contract to know what they

Finally, in case one is taking out a credit consolidation loan, then he should check the loan term. The reason is, several financial institutions offer easy loans (low interest rate loans) but extends the term period. Thereby, one incurs a long term debt.