Bad Credit Loans and Cleaning Bad Credit

By: Gen Wright

For some people, bad credit loans are a necessary tool for purchasing a home or purchasing a car. They may have the money to pay for these items, but their credit rating is too poor to get approved for a low interest rate loan. A bad credit loan gives them an avenue for making a major purchase and a way to begin adding good credit that, if they act responsibly, will help improve their credit rating over time.

But bad credit loans have a heft price. Because of the higher interest rates, a person with a bad credit loan can expect to pay hundreds of dollars more every single month for the exact same house than a person with a high score. Over the course of a 30 year mortgage, these bloated interest 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 to help protect lenders. Lenders collect far 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, so 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 stopped making payments.

But what if you aren't a bad credit risk? If you are a dependable consumer who can be trusted to pay your bills, is it fair that you have to pay extra to make up for all the people who are not responsible?

If your credit rating is 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 scores do not accurately portray their actual credit risk. Their bad credit score 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 depiction of their true 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 loan.

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For more information about fixing credit and bad credit loans, visit Lexington Law is the trusted leaders in credit repair with experience helping over 500,000 people in their fight for fair credit.

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