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Tuesday, September 1, 2009

Using Loans in an Attempt of Credit Repair

Credit repair is by no means a condition or situation that is worth scoffing at or shrugging off. It may well be so bad that there is no choice but to accept the fact and seek solutions to sort out the situation, which will in all likelihood not happen in the short term. Rather a medium to long term approach will suffice the credit repair process, and this may well be a saving grace in learning to live without and establish a disciplined approach in future spending and savings habits.

Using loans in the credit repair process may well be a solution for those that have really had enough of the current situation and can obtain access to consolidation loans via a possible lender. The downside of this type of loan for credit repair, is that in all likelihood the applicant will have a bad credit rating which will result in either the loan being declined or the acceptance of the risk by the lender at a considerably higher interest rate, or via a secured loan. This is where one will have to weigh up the pros and cons of trying to conduct the credit repair process with a consolidation loan, as the increased interest represents an added expense, and when calculated one can truly gauge how expensive such a process is.

In the case of securing a loan with an asset, the first and most important thing you will have to realize that if you default on the loan in any way you stand to lose the asset as a result. This may be your house or property and is not worth playing around with in terms of the credit repair process. Therefore prior to accepting the conditions of such a loan, you should consider the possible impact and future scenarios in the event of something going wrong.

There are some professional financial advisors that will strongly recommend that the consolidation of debt is not a good idea, in terms of securing a loan, because of the added interest and other charges that such a loan may attract, and they are quite right. However when the credit repair situation or the current financial situation begins to affect you on a personal level, albeit from a stress or health perspective because of the financial pressure, then the consolidation process may be the only solution for you.

If you have found yourself to be in such a situation, at the very least if you learn nothing else, take the time to establish how you landed up in such a situation, and make a commitment to never allow something like that to occur again, especially if you are aware that this could have been avoided. Credit repair is a lot harder than avoiding the trap of living on credit cards and financing.


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