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What are the Benefits of Repairing Your Credit?

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Lenders often discriminate against individuals with poor credit because of the assumption that they are a risky bet and will be less likely to repay loans on time. This means that repairing bad credit can open up new opportunities for individuals who previously may not have had access to them. If you have a poor credit score, credit repair in Houston with Platinum Resolutions can help fix your credit.

Meanwhile, here are the reasons why you should repair your credit

Saves money on interest

Repairing your credit can also help you save money on interest rates. Credit card companies can offer lower interest rates if they deem that individuals are responsible and likely to pay off their debts. If your bad credit report prevents you from getting lower interest rates on car loans or other personal loans, taking steps towards improving it will give you better access to cheaper borrowing options.

Helps to keep your overall debt low

If you have an outstanding credit card balance or several other debts that you’re paying off, your debt-to-credit ratio is likely high. A higher debt-to-credit ratio means you’re more likely to be hit with steep interest rates, which can easily add up over time. In fact, depending on how much debt you owe, it might even be a good idea to get a second job or ask for help from the bank if you need to pay down some of the debt immediately. The sooner you can get your credit card balance and other debts below 30% of your available credit limit, the less you’ll have to worry about being charged outrageous interest rates in the future.

Apply for a secured line of credit

Secured lines of credit work similarly to traditional lines of credit, except they require collateral; most often, it’s a savings account used as collateral. The lender will hold onto the money in this account until the line of credit is paid off, so even if you fail to make payments on time, they can’t take any action against you without negatively impacting you financially. However, once the line of credit has been paid off and closed out, your interest rate on that account goes up significantly.

Obtain a higher credit limit

When you fix your credit, you can obtain a higher credit limit. This is especially helpful for those new to having a credit card. Higher limits are often granted when the borrower’s credit has been repaired because creditors know that a person who has worked hard to repair their credit is less likely to be taking out loans without paying back their debts. Having a higher limit allows you more freedom. So, you can buy more big-ticket items without worrying that you won’t be able to pay off your balance by the due date.

Bottom line

Lenders, employers, insurance agents, and landlords all use your credit scores to grant you access to their products or services. If your credit score is below a certain level, some institutions may decline your application. And when that happens, your credit score is negatively affected still more. Ensure you understand the benefits of repairing your credit so that you can take steps to improve it before it’s too late.

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