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Learn Proven Methods of Repairing Credit
Improve Your F.I.C.O. Score & Qualify for
Better Rates
People with bad credit and/or a low F.I.C.O score usually have
a hard time getting a loan and when they do finally qualify for one they pay
higher interest rates. Higher interest rates cause the monthly payments
to be higher.
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What is
the Price you are already
paying for Bad Credit? |
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If
you are making payments on a car, you are probably paying
between $5,000 and $9,000 more in interest just for
having bad credit. This added interest shows up every month in
a higher payment. |
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Credit Status |
Rate |
Payment |
Over 5 years |
Monthly Cost
of
Bad Credit |
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Perfect |
10% |
$424.94 |
$0.00 |
$0.00 |
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Mildly damaged |
14% |
$465.37 |
$4,722.54 |
$76.17 |
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Damaged |
20% |
$529.88 |
$8,593.30 |
$138.60 |
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| Bad credit in
auto financing can really hurt, but it is nothing compared to
the cost of bad credit when a home is involved. A typical home
can cost between $50,000 and $130,000 more in interest
if you are buying the home with bad credit, as indicated
below. |
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Credit Status |
Rate |
Payment |
Over 30 years |
Monthly Cost
of
Bad Credit |
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Perfect |
7% |
$655.30 |
$0.00 |
$0.00 |
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Mildly damaged |
9% |
$804.62 |
$50,155.24 |
$139.31 |
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Damaged |
12% |
$1,028.61 |
$130,791.63 |
$363.30 |
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| If you are
looking to make a major purchase in the next 6 to 12 months
you should obtain copies of your credit reports from all three
credit agencies ASAP. You can learn more about obtaining and
reading your reports as well as a variety of ways to dispute
negative information by ordering your copy of
"Give Yourself Credit". |
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Understanding
Your Credit Score |
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Your Credit Score is used by
anyone loaning you money. Credit card companies, home equity lenders,
auto loan lenders and finance companies all use a model created by
Fair, Isaac and Co, the San Rafael, California company that pioneered
credit scoring 40 years ago and dominates the field today. This score
is most often known as FICO and serves as a snapshot of your credit
history.
A low score can raise the price
of your loan and a very low score can mean denial of your loan
completely. Here are the approximate percentages that determine your
FICO Score.
- Payment history (35%).
The largest factor determined on your FICO score is your basic
payment history. The number of unpaid bills you have, any bills sent
to collection, bankruptcies etc... The more recent the problem,
the lower your score.
- Outstanding Debt (30%).
Are your cards maxed out? High balances or more precisely, balances
that are close to your credit limit can negatively effect your
score. Keep your balances below 30%.
- Length of your credit history (15%). How long have your accounts been open? The longer,
the better.
- Recent inquiries (10%).
Every time you apply for credit of any kind, you create an inquiry
on your credit report. Lots of Inquiries negatively effect your
score.
- Types of credit in use (10%). Current loans from finance companies. How many and
how much.
Your score will range between 300 and 870. The
higher the better. As your score increases, your credit risk
decreases. Exact numbers differ by lending institution but the
average high approval score is 680 or above. Often times your score is
taken from all three credit reporting companies and the middle
score or average score is used.
Depending on the lending institution, your score
can cost you. Some lenders will charge a higher interest rate if your
score is below 600
When you apply for credit your score does not
come directly from FICO. Instead each bureau has its own version of
the rating system with its own name.
Equifax is called Beacon
Trans Union is Empirica
Experian is Experian/Fair Issac
A credit score of 680 or above can save you
money, especially for home loans. If you are considering a significant
loan you will want to be sure to check your credit reports first. If
negative items appear on your report you have two choices. Live with
it for 7 to 10 years or dispute these items. For more information on
repairing bad credit
Click Here.
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Credit Repair Kit
Obtain your own credit report, removed negative marks that
destroy credit, add positive credit indicators and build powerful credit.
This program will show you how. |
