You can’t talk about credit repair without talking about debt. Credit problems usually occur because people pile up too much debt and are unable to pay it back. When that happens their credit score drops and often, it’s difficult to get it back in good standing. If this is the problem you’re facing, how do you do it?
Typically, there are two options. The one you choose will most likely depend on your current financial situation, and whether or not you own a home with existing equity.
Homeowners that have existing equity in their homes can borrow against that equity in order to repair their credit. With a second mortgage, such as a home equity loan or a home equity line of credit, you can borrow up to 80 per cent of your existing equity, provided you have at least 20 per cent equity to begin with. This second home loan will come with a much lower interest rate than what can be found on credit cards and other high interest debt.
The money received from the second mortgage can then be used to pay off that high interest debt, and you’ll spend much less on servicing that debt. Even better, because your old debt will be paid off, you’ll immediately begin to repair your credit.
If you’re not a homeowner but still have problems with your credit that you’d like to repair, the road to better credit will be a bit of a longer and more challenging one. This path requires you to obtain a copy of your credit report, comb through it to find errors, and then to start paying down your debt. This last and most important piece of credit repair can be a long involved process itself, requiring phone calls to creditors, and creating payment plans, as well as a budget. While this can be an arduous road to credit repair, it’s still one that needs to be done should you have credit problems. And it’s also one that will be very well worth it in the long run!
If you’re a homeowner looking to repair your credit, talk to us at MortgageB. We can show you all the options at your disposal, and how easy it can be to get on the road to good credit – and good financial health!