Credit Repair Loans

Today's irksome economic times make it difficult for many Americans to make ends meet. Some of us feel like we're being nickeled-and-dimed to death by late fees, penalties, and other undesirable charges even though we're just doing our best to keep up with the monthly bills. It's situations like this that make credit repair loans seem awfully attractive but we shouldn't let desperation or despair lead us into unwise decisions we may regret later.

Credit repair loans are often called debt consolidation loans and they can seem like a godsend at first glance. In some cases, they do provide the way out of economic turmoil. In many cases, however, they lead to our worst nightmares.

Fundamentally, credit repair loans lump all your individual revolving accounts together and provide you with the cash you need to pay them off. After that, the only payment you need to worry about is the one you make to pay back the debt consolidation loan itself.

For many struggling consumers, the thought of making one payment each month instead of dozens is irresistible. Unfortunately, it's that one payment that can lead to financial ruin.

Remember, that one monthly payment covers the cost of paying off all those other accounts. If you were paying back $500 per month to many creditors, you'd probably be needing to pay back at least $500 per month to that loan consolidation creditor. If finding $500 to pay back lots of accounts was difficult, it'll still be difficult to find it to make just one really big monthly payment, too.

Another problem is the nature of those many accounts you were juggling in the first place. Credit repair loans are almost always limited to unsecured debt, such as revolving accounts (gasoline and credit cards, department stores, etc.) or student loans. No collateral was needed to get them.

Credit repair loans almost always require the consumer to place something of documentable value as collateral to cover the value of the debt consolidation package in the event the consumer can't afford to pay back the credit repair loan. This means your house or your car or something of similar value.

These credit repair loans, secured by your personal property, allow the lender to take claim of the collateralized property if the consumer defaults on the loan. In other words, you lose your home, your car, or whatever you've placed as collateral to secure the debt consolidation loan. For many American consumers, loss of these investments spells absolute disaster.

Despair and desperation are very unpleasant feelings but the disaster of losing one's home or transportation can lead to a much more difficult recovery period. Enter into such a financial arrangement only as a last resort and be mindful of every single detail involved in the process. Consider credit repair loans only after seeking the advice of a qualified financial planner and exhausting all other means of relief first.