An increasing number of financial institutions are making a profitable business out of lending money to borrowers with a poor credit history. They range from the "pay-day loan" storefronts to well-known banks and mortgage lenders. They are taking advantage of an opportunity to charge interest rates that are much higher than what borrowers with good credit might pay. After all, bad credit doesn't mean you can not get credit; you just can't get credit at a reasonable cost. In this article, we will share with you some information that the "bad credit lenders" do not want you to know.
These lenders-of-last-resort want you to believe you are very lucky that they are willing to do business with you. They would love to be viewed as your financial savior; the banker on a white horse that is willing to loan you money when no one else will. The truth is quite the opposite. They are charging you such high interest rates that it may become impossible for you to ever dig yourself out of debt. You might be struggling every month just to make the minimum payments. Meanwhile the debt is piling on.
The bad credit lenders certainly do not want you to know that you could get a decent interest rate on a loan elsewhere. But can you? An honest answer is "Maybe not today, but soon." It all depends on how fast you can repair your bad credit and raise your credit score.
It is possible to fix your credit problems yourself, for free. It will take a determined effort on your part. Start by cutting back on expenses where ever you can. This should give you some extra cash that you can apply toward your loan balances. If you are stuck in an un-winnable situation, try negotiating with your lenders to forgive some of the debt.
Get copies of your credit reports, and go over them carefully to make sure there is not outdated or inaccurate information in them. Work with the credit bureaus to delete the wrong information. Maybe one of your creditors is reporting that you have an outstanding, overdue balance, but you can prove that you have paid off that loan. Contact both the credit bureau and the lender in writing, and be sure to include copies of any documents that back up your claim.
Build some good credit references that will be reported to the credit bureaus. This may mean obtaining alternative sources of credit, such as a secured credit card or sub-prime merchandise card. They help raise your high credit limit while lowering your debt to credit ratio.
These are all techniques that your current high-interest lenders do not want you to know about. If you really work at lowering your bad debt, and increasing your credit limits, your credit reports and FICO score will reflect your efforts. It won't happen over night, but in time you can start getting loans and even a mortgage at reasonable interest rates from lenders who value your business.
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