Bad Credit Loans and Repairing Credit
- By Stuart Hunter
- Published May 8th, 2009
- Loans
- Unrated
Stuart Hunter
Providing credit repair services since 1991, Lexington Law has helped over 500,000 clients legally take on their credit. Last year alone, Lexington Law helped clients remove over 600,000 negative items from their credit reports.
View all articles by Stuart Hunter
For some, bad credit loans are a necessary tool for getting into a home or purchasing a car. They have the steady income required to make these items, but their credit score is too low to get approved for a standard interest rate loan. A bad credit loan gives them a way to make these major purchases and a means to begin building good credit that, if they act responsibly, will help improve their credit rating over time.
But bad credit loans come at a cost. Because of the higher interest rates, someone with a bad credit loan can expect to pay hundreds of dollars more on each monthly mortgage payment for the exact same home than a person with a high credit rating. Over the course of a 30 year mortgage, these additional interest payments can add up to hundreds of thousands of dollars. Those hundreds of thousands of dollars are the cost of using a bad credit loan.
This demonstrates one of the costs of bad credit, and in many cases, a cost that is not necessary and not fair. Bad credit loans are structured to protect lenders. Lenders collect far more than the original value of the loan to protect themselves against losses caused by people defaulting on their loans. When approving bad credit loans, lenders expect a certain percentage of people not
to pay off the loan, so they make sure those who do make their payments pay extra to equal out those who don't. Basically, when you make a payment on a bad credit loan, you are paying on your loan and on the loans of all the people who are not making payments.
But what if you aren't a bad credit risk? If you are a dependable consumer who can be trusted to repay your debts, is it fair that you have to pay extra to cover all the people who are not responsible?
If your credit score is making you seem like a less credit worthy person that you really are, you are not alone. There are many, many people out there whose credit scores do not accurately portray their true credit risk. Their low credit score gives lenders the impression that they are not credit worthy when in fact, the opposite may be true. Credit repair is the tool thousands have turned to in order to make sure their credit reports are an accurate depiction of their true credit worthiness.
Using credit repair, people have been able to significantly increase their credit scores so they don't have to settle for a bad credit loan.
But bad credit loans come at a cost. Because of the higher interest rates, someone with a bad credit loan can expect to pay hundreds of dollars more on each monthly mortgage payment for the exact same home than a person with a high credit rating. Over the course of a 30 year mortgage, these additional interest payments can add up to hundreds of thousands of dollars. Those hundreds of thousands of dollars are the cost of using a bad credit loan.
This demonstrates one of the costs of bad credit, and in many cases, a cost that is not necessary and not fair. Bad credit loans are structured to protect lenders. Lenders collect far more than the original value of the loan to protect themselves against losses caused by people defaulting on their loans. When approving bad credit loans, lenders expect a certain percentage of people not
But what if you aren't a bad credit risk? If you are a dependable consumer who can be trusted to repay your debts, is it fair that you have to pay extra to cover all the people who are not responsible?
If your credit score is making you seem like a less credit worthy person that you really are, you are not alone. There are many, many people out there whose credit scores do not accurately portray their true credit risk. Their low credit score gives lenders the impression that they are not credit worthy when in fact, the opposite may be true. Credit repair is the tool thousands have turned to in order to make sure their credit reports are an accurate depiction of their true credit worthiness.
Using credit repair, people have been able to significantly increase their credit scores so they don't have to settle for a bad credit loan.