1. You don't have a credit history yet in the U.S.

2. You have had financial hardship in the past and your credit has suffered

If you dream of owning a home, buying a car, or starting your own business, it will be difficult and expensive to accomplish these goals without establishing and maintaining sound credit. Because this takes time and good financial practice, many Hispanics find immediate help from a loan shark.

What is a loan shark?

When you look for money, you may hear from people you know: "I know this person who loans money and doesn't even ask for papeles". This person who "loans money" could be a friend of a friend, someone who is friend of the family, or even could be found in a store in your neighborhood. There are many disadvantages to using the services of a loan shark even though many claim to be legitimate moneylenders.

They charge weekly interest rates – What is the real cost of loans from a loan shark? The lender will give you a weekly interest rate instead of an annual one. Remember that bank loans and other financial institutions always use annual interest. Let's take a look at a typical case: The lender gives you $1,000 and you agree to pay 5% weekly interest on this amount. 5% each week translates to about 20% each month, and if you multiply this by 12 months in year, you have an annual interest rate of 260%!

The payments are confusing – Weekly interest rates that don't seem that high may translate to up to 10, 20 and 30 times more interest than what you would pay in a traditional loan agreement.

The loans are hard to pay off– In fact, they are designed to be almost impossible to repay. Many people who have taken out loans from these lenders end up losing more than what they originally invested. If you are unable to pay, the lender may constantly harass you or even threaten you with violence. Many people who borrow money from loan sharks lose their businesses.

They don't report to credit bureaus – Loan sharks sometimes do not report their loans to credit bureaus. To establish, protect and maintain your credit history, you must make sure that your creditors do in fact report their loans to credit agencies. If they do not, there is no official record of your loan payments.

They don't operate within the regulations – If you have a complaint, you have nowhere to go because loan sharks do not have to abide by regulations put in place to protect you as the consumer.

In general, it is better to avoid these types of lenders at all costs. If you need money for your business or for an emergency and if you do not have access to a bank loan, try to take out loans with ACCION, a non-profit organization that gives business and personal loans and reports to the three main credit bureaus.

For more information, visit www.yourmoney.accion.org.