Beware of Credit Offers Aimed at Recent Bankruptcy Filers

Rent-to-own

By renting a TV, furniture or appliance from a rent-to-own company, you will often pay three or four times more than what it would cost to buy.  The company may make even more profit on you because the item you are buying may be previously used and returned.  And if you miss a payment, the company may repossess the item leaving with you no credit for the payments you made.

Source: Using Credit Wisely After Bankruptcy Pamphlet, National Consumer Law Center, Boston, MA, www.nclc.org.

Beware of Credit Offers Aimed at Recent Bankruptcy Filers

Be wary of auto dealers, mortgage brokers and lenders who advertise: “Bankruptcy? Bad Credit? No Credit? No Problem!”  They may give you a loan after bankruptcy, but at a very high cost.  The extra costs and fees on these loans can make it impossible for you to keep up the loan payments.  Getting this kind of loan can ruin your chances to rebuild your credit.

Mortgage Loans

If you own your home, some home improvement contractors, loan brokers and mortgage lenders may offer to give you a home equity loan despite your credit history.  These loans can be very costly and can lead to serious financial problems and even the loss of your home.  Avoid mortgage lenders that:Continue Reading

Beware of Credit Offers Aimed at Recent Bankruptcy Filers

Avoid High Cost Predatory Lenders

Don’t assume that because you filed bankruptcy you will have to get credit on the worst terms.  If you can’t get credit on decent terms right after bankruptcy, it may be better to wait.  Most lenders will not hold the bankruptcy against you if after a few years you can show that you have avoided problems and can manage your debts.

Source: Using Credit Wisely After Bankruptcy Pamphlet, National Consumer Law Center, Boston, MA, www.nclc.org.

Beware of Credit Offers Aimed at Recent Bankruptcy Filers

Credit Repair Companies

Beware of companies that claim:  “We can erase bad credit.”  These companies rarely offer valuable services for what they charge, and are often an outright scam.  The truth is that no one can erase bad credit information from your report if it is accurate.  And if there is old or inaccurate information on your credit report, you can correct it yourself for free.

Source: Using Credit Wisely After Bankruptcy Pamphlet, National Consumer Law Center, Boston, MA, www.nclc.org.

Beware of  Credit Offers Aimed at Recent Bankruptcy Filers

“Secured” Credit Card

Another type of credit marketed to recent bankruptcy filers as a good way to reestablish credit involves “secured” credit cards.  These are cards where the balances are secured by a bank deposit.  The card allows you a credit limit up to the amount you have on deposit in a particular bank account.  If you can’t make the payments, you lose the money in the account.  They may be useful to establish that you can make regular monthly payments on a credit card after you have had trouble in the past.  But since almost everyone now gets unsecured credit card offers even after previous financial problems, there is less reason to consider allowing a creditor to use your bank deposits as collateral.  It is preferable not to tie up your bank account.

Source: Using Credit Wisely After Bankruptcy Pamphlet, National Consumer Law Center, Boston, MA, www.nclc.org.