I have been a real estate agent and a loan officer, so am intimately familiar with how credit works.
When I was a loan officer (aka mortgage specialist), I worked with credit-challenged individuals to help them repair bad credit – ie, increase their credit score – so that they could qualify for a home loan.
This was eye-opening for me on many levels because so much of what you had to do to repair bad credit just didn’t make sense.
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Credit Repair: Rules That Can Hurt You When Trying to Repair Bad Credit
For example, did you know?
That paying delinquent accounts can actually lower your credit score;
That closing accounts – even good ones you’ve paid on time – can significantly lower your credit score;
That credit reporting agencies are biased against certain types of credit lines and will lower your score if you have these types of accounts;
That having too many credit accounts – even when they’re all current and paid on time – can lower your credit score;
That contacting a debtor to “do the right thing and pay” can actually hurt you when trying to repair your credit; and so much more.
All of this is true. This is what makes credit repair so confusing for many consumers.
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Repair Your Credit: Gain Access to the Rules of the Game
Repairing your credit is like being part of some special club. You have to gain access to the rules of the “credit repair game” in order to be able to “compete” and clean up bad credit.
Fix Credit: Understanding Your Credit Score
Before you can fix your credit, the first thing you need to do is understand what it is and how lenders use it. To that end, following is some basic info.
Your credit score is a number based on the information in your credit file that shows how likely you are to pay a loan back on time. The higher your score, the less risk you represent.
The credit score that lenders use is called a FICO® score. Your FICO score helps a lender determine whether you qualify for a loan and what interest rate you'll pay.
You get much more detail on this in 37 Days to Clean Credit.
FACT: Credit scores range from a low of 300 or 400 to a high of 800 or 900, depending on the source cited. The higher your score, the better. This means you will get lower interest rates on everything from home and auto loans to credit cards.
Alternately, the lower your score, the higher the interest rate. And this can get expensive – quick. How? Read on.
How Bad Credit Can Cost You Hundreds of Thousands of Dollars
To see in hard numbers why it’s worth it to clean up your credit, let’s take a look at a dream – the American dream most of us aspire to – home ownership.
Consider this: Roughly, a score of 620* used to be necessary to qualify for a prime home loan at conventional rates. Consumers with lower scores will be charged a higher interest rate, or denied altogether.
Falling below the 620 cut-off point can impose significant costs on mortgage borrowers. Over the life of a 30-year, $150,000 mortgage for example, a borrower paying a sub-prime rate of 9.84%, instead of a prime rate of 6.56%, would pay $317,517 in interest instead of $193,450 – a difference of $124,067 in interest payments the person with bad credit has to pay back over the life of the loan.
As this example illustrates, it literally pays to clean up your credit.
The good news is that you can repair your credit. And, all the tools you need can be right at your fingertips in a matter of minutes.
Note: When I was a loan officer, I recommended that all consumers check their credit reports at least once a year; active credit seekers should probably check their reports every six months.
*In light of the home foreclosure crisis that started in 2007, you need a much higher credit score -- anywhere from 720 to 780 -- to even be considered for almost any kind of home loan.
Are You Tired of Being Punished with Higher Rates Because of Your Bad Credit. Learn How to Clean Up Your Credit Report Quickly!
Credit Report Repair: There is Help!
Luckily there is help. The 37 Days to Clean Credit repair guide shows you how to avoid the pitfalls that most encounter when trying to get on the road to having good credit.
A super secret strategy to remove all of your harmful inquiries in days, not weeks or months!
How to STOP those harassing collection phone calls dead in their tracks! A neat little trick you can use to double your credit card limit with one phone call!
A ninja technique to drive your score up an easy 75 points with one simple call!
The little-known secret to getting your credit card APR interest rates dropped to zero! (This secret statement will save you thousands upon thousands of dollars in interest payments!)
Why being self-employed can actually work against you and how to avoid this simple mistake millions of people make.
How to Delete Medical Accounts Off Your Credit Report In 3-Easy Steps!
And so much more.
P.S.: Get the FREE credit repair report, 6 Credit Repair Myths and 6 Specific Ways to Raise Your Credit Score and start repairing your credit today!
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