There is an inextricable link between a person's credit rating and the probability of them defaulting on the agreement. Repairing credit history is in that person's best interests because a better credit score increases the likelihood of approval. It is also a lot cheaper to borrow money. The timeframe to repair credit rating varies depending on the severity of the transgression, with chapter 7 bankruptcy causing the largest fall. Minor credit indiscretions, such as a late payment, can be recovered from relatively quickly.
Repairing Credit History Leads to Lower Borrowing Costs
- An individual with a $200,000 mortgage and a score of 620-639 should expect to pay an interest rate of 6.018% and a monthly payment of $1202.
- Should that person have an excellent credit score of 760 to 850, the APR would be 4.429% and the monthly payment just $1004.
* The above figures are provided by myFICO on June 18, 2010.
