Effects of a Bad Credit Rating

The Adverse Effects of Bad Credit Ratings and Tips on Credit Repair

Generally, younger people are more careless with money and usually pay very little attention to their credit scores. In addition, the younger generation are known to borrow as much as possible. At this stage it is usually not possible to take out bigger loans such as home loans, aside from the usual; student debt. This leaves room for errors which can hurt the credit scores of younger individuals.

The unfortunate factor relating to the wrong choices in credit options, often comes back to haunt us in the future. The effects relating to bad credit are usually costly. Lenders always closely scrutinize credit scores in order to determine if the loan will be paid back. Having a low type of credit score sends off red flags, loans are either denied or come with an exceptionally higher interest rate.

The good news about a low credit score is that there is room for change. With a higher credit rating individuals can save a lot of money on paying back a loan with a low interest rate. Even saving 1-2% in interest can translate into a saving of thousands on larger loans.

Valuable Tips on Credit Repair

You may be one of the many people out there that has a bad credit rating without even realizing this factor or how this happened. The bad credit score will usually reveal itself when you apply for credit and you are soon denied or refused.

Bad Credit Rating Explained

Bad credit ratings are defined as a file that contains your credit scores, the bad scores will be one or numerous adverse listings like bankruptcy, judgments and defaults. Many of these types of listings result in making it extremely difficult or impossible to obtain or get approval on credit for as long as five years on defaults and seven years of bankruptcy.

This can affect a number of areas in your life, such as buying a home, car, personal loans, business loans and even credit cards or contracts on a mobile phone. Currently, the lending criteria of all the major banks reject applications on home loans for default listings that have lapsed over a period of 60 days.

Furthermore, lenders even reject loans for individuals who have an excess of credit inquiries, usually more than five in one year.

Unfair Black Marks on Credit Scores

Credit files have been known to often contain errors, a recent survey revealed that up to 34% of individuals have errors on their credit files. Many individuals who have queried these incorrect bad ratings are usually told the listing will not be able to be removed. All that may be offered is that the listing can be marked as settled or “Paid”.

Repairing Credit Ratings

When you discover that your credit report has defaults, writ, and Judgments which is considered to be an error. It is time to contact a company that deals with credit repair issues. One of the important factors relating to credit repair is you only have one chance to clear your name.

Some individuals who are not informed of the legislation who try to deal with creditors by themselves. Sometimes, can cause more harm to the individual. Credit repair is a long process that involves reviews on all your documentation as well as your credit file.

Using a credit repair agent will mean you have someone who directly negotiates with your creditors who placed the listing on your name. The negotiation, hopefully results in the removal of the default. The process involves submissions of various documents until such stage as an agreement can be reached between the creditor and the repairer.

It is very important that you choose the right company to deal with such sensitive affairs. Below are some tips on making an informed decision on a reputable repair firm:

  • -Are you able to verify the company’s street address?
  • -Are they an American company based in America?
  • -Are their costs published?
  • -Are there any reviews or testimonials from previous clients?

Reputable repair firms are up front and honest about the services they provide along with transparent costs.  You can benefit from financial freedom with the right choices.