Credit Repair Help

By: Ontario Mortgage Action Centre  09-12-2011
Keywords: credit card, debt, home equity

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You suddenly find yourself in need of a substantial amount of money and fast. One of the options open to you is to avail of a home equity loan. The question now is, how do home equity loans work?

You must understand the advantages and disadvantages of a home equity loan so that you know what you are getting yourself into before you find yourself without a house. A home equity loan is one type of a second mortgage. However, this should not be mixed up with a home equity line of credit which is more like a credit card. You are given a credit limit and paying for your debt can increase your credit that you can potentially borrow against.

It is quite a challenge when it comes to refinancing for people with bad credit because lenders are very careful when it comes to approving loans, and like it or not, they will look into your credit history. Your credit information are stored in databases so that applying for any type of loan can mean that the lender will look up into your records and see that you have not been as prompt in paying your debts as you should be.

When Should You Refinance?

Refinancing for people with bad credit is always on a case to case basis. Each situation is unique and different so it doesn’t really mean that if you have the opportunity to avail of this option. However, you can always ask a lender if you qualify.

You know it’s a good idea to refinance if you can achieve a lower rate than the present interest of your loan. If you are refinancing to pay out your other debts then it’s recommended to opt for a cash-out refinance. Nonetheless, applying for this program needs an income that can put up with the higher payment.

Are you finding it difficult to rise above your debts? In the current economic times, many will answer this questions a yes. A debt management plan can help you clear your debts easily and quickly, bringing you peace of mind.

Here are some of the tips that can help you well in clearing your debts through an effective debt management plan:

Cut Down On Expenditure

The first thing you need to do in a debt management plan is to come up with a plan that will help you save lot money. This can be done by cutting down on the expenditures. It may sound harsh but it is advisable to let go of some of your costly habits such as impulsive buying. This will help you lead a stress free life and improve your financial situation.

The question was: “Is it better to have fewer credit cards maxed out…or more with lower balances if the rates are the same?”

This is a great question, and very common. Your credit score can be broken down and based on a few factors.

The first factor is repayment history. If a person is habitually late on payments, then the delayed payments will reflect negatively on a credit score.

Second, your credit score is based on the percentage of the amount of credit limit used. If a person is habitually over limit their credit limit, most companies reviewing your credit report consider consistent overages almost as bad as missed payments.

So, to answer this question, a person is better off to have multiple cards with lower amounts on them then a few cards maxed out.

For example if you have $10,000 in credit card debt you are better off to hold $5,000 on 2 different cards that have a $10,000 limit (I.E. 50% of the high credit limit on both cards) then have $10,000 on a card with a $10,000 limit.

Transferring credit card balances as outlined above (as a short term solution), may be a better option for some people.

All the best


Assess the Damage – Get a copy of your credit report and see what it has to say.  Most Canadians are shocked to learn what’s on their credit report – and what’s missing.  The only thing a potential lender has to judge your ability to repay a loan is your credit report, so if it’s not accurate it will be impossible for a lender to make a reasonable assessment of your ability to repay a loan.  Credit clean up tip # 1: Assess the damage.

Take a look at the International Herald Tribune article and judge for yourself.  I’d really like to know what you think…

The information in this article was current at 06 Dec 2011

Keywords: credit card, Credit Cards, credit repair, Credit Report, debt, equity loan, equity loans, home equity, Home Equity Line Of Credit, home equity loan, home equity loans, line of credit

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