When times are tight and you need raise some quick cash, there are five critical areas that need to be avoided if you want to keep your credit rating from diving into the dumpster.
First, let's start with predatory lending. If you are in the market for a mortgage, a credit card, or a loan of any kind, this is definitely something you need to be aware of. Predatory lending is nothing more than theft by deception, where the lender is in the practice of intentionally misleading a customer to agree to unfair or unrealistic loan terms. Often these loans are a type of collateral loan, whereby you put up a house or automobile as collateral. That way, when you default on the loan, they have something they can sell off to make back their money and then some. Meanwhile, you, the consumer, is often left high and dry and in worse shape than when you started. The Center for Responsible Lending http://www.responsiblelending.org/ can help.
Next I would like to discuss pawnshops. Many people look at a pawnshop as an easy way to get some fast coin in their pockets, but many do not realize what they are getting themselves into. Did you know that the interest rate at a pawnshop could be as high as 100% of the loan value? Here is basically how it works; you bring in an item of value, the pawnshop pays you for the item (usually for much less than the item is actually worth), and then you have a predetermined amount of time in which to pay back the money (plus interest) that you agreed to. If you do pay it back, in full and within the terms of the agreement, you will get your prized possession returned to you, but if you default on the terms of the agreement, your valuables could be gone forever. Unless of course you manage to buy it back for twice what they gave you for it! If you are thinking of pawning some of your treasures, check out this report on Fox Business first http://glickreport.blogs.foxbusiness.com/2008/04/02/ need-extra-cash-hit-the-pawn-shop/.
Credit cards, in general, are not a bad thing, if you use them responsibly. One of the problems with credit cards is that people always seem to think; "the more, the merrier", which unfortunately, is just not the case. Many lenders entice you into spending more than you can afford to pay by giving you high credit limits or pre-approved offers. Just because they give you a $10,000.00 credit limit does not mean that you are able to afford $10,000. It simply means that the issuing credit card company perceives you as worthy of this amount and that you are likely to use the limit to it's fullest based on your past spending habits. Sadly, this is where most people fall prey; they see these credit limits are free cash. Forgetting, of course, that they will have to pay this money back plus interest and fees. Before you agree to accept any card you should always read the fine print on the disclosure agreements and know exactly what you getting yourself into. If you cannot say no to temptation easily, too many cards can easily mean way too much debt. For more information on this subject, go to MSN Money http://moneycentral.msn.com/content/Banking/creditca rdsmarts/P120478.asp.
Also, let's not forget that credit card debt is a form of unsecured loan. If you get in over your head on credit card debt, and then decide to do a debt consolidation loan (which is a secured loan, normally securing your home as collateral), you have now turned that unsecured debt into secured debt and you now have a much higher penalty for defaulting on that loan. You could even lose your home. If you decide to do a debt consolidation, it is wise to try to keep your terms realistic. If you tack on years to save a few bucks every month, in the long run you will end up paying a small fortune in interest. Play with the numbers using an online calculator; you will be surprised at how much more you will be paying. http://bankrate.com/ has many excellent articles and calculators that you will find very helpful.
Last but not least, is the never-ending list of get rich quick schemes out there. A good rule of thumb is if it seems to good to be true, it probably is. Scam artists prey upon those who jump without looking. Always check out a company before agreeing to anything. And never give out personal information such as; social security #'s, bank account information, credit card #'s, even your home address. More information can be found at http://www.wisegeek.com/what-is-a-get-rich-quick-sch eme.htm.
Most reputable companies have a listing with the Better Business Bureau. http://welcome.bbb.org/. Always do your research; it will be well worth it in the long run.