Save Thousands Thanks to Credit Repair

Credit repair can save consumers hundreds of dollars every month in interest payments. That’s because lenders of all types, whether they’re passing out home, auto, business or personal loans, rely on credit scores to determine the interest rates they charge borrowers. Borrowers with high credit scores qualify for the best interest rates. And today, these top rates are truly impressive – throughout much of the second half of 2009, interest rates on 30-year fixed-rate mortgage loans had fallen under 5 percent, a historic event. But borrowers with bad credit scores won’t qualify for these rates, and that’s a distinction that can cost these borrowers a significant amount of money every year.

Why Credit Repair Matters

Here’s an example of why credit repair matters: Homeowners who have a $200,000 30-year fixed-rate mortgage loan with an interest rate of 7 percent will pay $1,330.60 each month. Homeowners with the same loan but with an interest rate of 5 percent will pay $1,073.64 every month. That’s a difference of $256.96 a month, or $3,083.52 a year. Homeowners, who take the steps to repair their credit and boost their credit scores, will qualify for lower interest rates – saving themselves potentially thousands of dollars each year.

The Basics of Credit Scoring

Credit scores, along with yearly income levels, are the most important factors that lenders look at when determining the interest rates that they’ll charge their borrowers. The nation’s three credit bureaus – TransUnion, Experian and Equifax – maintain their own credit reports on U.S. consumers. The information in these reports are used to determine consumers’ credit scores, a single number that represents the way in which consumers have managed their money in the past. Consumers who have a history of missing credit-card payments, defaulting on auto loans or running up large amounts of credit-card debt will have lower credit scores. Those who have scores of 620 or less, will usually have to take out bad credit loans. They’ll then miss out on the nation’s historically low interest rates.

Repairing Credit

Fortunately, it is possible for consumers to repair their credit. They simply have to start paying their bills on time, closing excess credit-card accounts, paying their rent on time each month and slashing their debt. There are no secrets to fast credit repair. Boosting a credit score takes time and diligence. Borrowers will have to weigh their choices: Should they take out a home or auto loan now, even if their credit score is weak, or should they wait a year or more until they’re followed the steps to credit repair? The answer could mean a difference of thousands of dollars each year.

Author: Credit Loan Link:http://www.creditloan.com/blog/2010/01/29/save-thousands-thanks-to-credit-repair/