Consumers with low credit scores become the main target of illegitimate lenders
Consolidation loan scams are on the rise in the United States. Many illegitimate lenders now trap consumers with low credit scores who are also heavily in debt. Consumers with low credit scores are easy to convince for a loan as they are already heavily in debt and it is difficult to get a low interest loan for them.
Some lenders offer lure options to low credit scorekeepers such as low interest loans, no credit score scoring, and quick financing.
According to Colony Associates Review, consumers become more indebted after obtaining a loan from mediocre lenders. These lenders reach out to consumers through direct mail, Internet advertisements, and cold calls.
They convince consumers to give a loan even with low credit scores, but consumers get unexpectedly higher rates on monthly payments. And these payments worsen their credit rating and leads them to bankruptcy.
Debt consolidation loans are not bad if they are taken from legitimate lenders. This type of loan is the best way to pay off all debts such as tuition, medical bills and the like through a single creditor at reasonable interest rates. But some lenders take advantage of consumers’ poor financial conditions and force them to pay large sums for loans.