Do You Really Want a Bad Credit Loan?
- By Stuart Hunter
- Published 05/20/2009
- Credit
- 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 HunterBad Credit Loans and Cleaning Bad Credit
For some, bad credit loans are a necessary tool for purchasing a home or buying a new a automobile. They may have the money to pay for these purchases, but their credit rating is too poor to get approved for a standard interest rate loan. A bad credit loan gives them an avenue for making these major purchases and a way to begin adding good credit that, if they continue to act responsibly, will help improve their credit score over time.
But bad credit loans have a heft price. 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 house than someone with a good score. When applied to an entire 30 year mortgage, these additional payments can add up to hundreds of thousands of dollars.
This is 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 the way they are to help protect lenders. Lenders collect more than is required to profit from the transaction to protect themselves from losses caused by people defaulting on their loans. When approving bad credit loans, lenders are expecting a certain percentage of people not to pay off the loan. They
make sure those who do make their payments pay extra to equal out those who don't. 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 credit risk? If you are a responsible consumer who can be counted on to pay your bills, is it really fair for you to have to pay extra to make up for all the people who are not responsible?
If your credit reports are 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 rating does not reflect their true credit risk. Their bad credit 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 representation of their real 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 mortgage loan.
But bad credit loans have a heft price. 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 house than someone with a good score. When applied to an entire 30 year mortgage, these additional payments can add up to hundreds of thousands of dollars.
This is 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 the way they are to help protect lenders. Lenders collect more than is required to profit from the transaction to protect themselves from losses caused by people defaulting on their loans. When approving bad credit loans, lenders are expecting a certain percentage of people not to pay off the loan. They
But what if you aren't a credit risk? If you are a responsible consumer who can be counted on to pay your bills, is it really fair for you to have to pay extra to make up for all the people who are not responsible?
If your credit reports are 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 rating does not reflect their true credit risk. Their bad credit 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 representation of their real 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 mortgage loan.