How a 2nd Mortgage Can Help Boost Your Credit
Getting a 2nd mortgage is a big decision. You've done your research, weighed your options, and decided that you could use the money to complete that long-awaited repair project or to take that dream vacation. Did you know that a 2nd mortgage could help increase your credit rating? You may think that you are just taking care of other projects or using the money to relax, but you are also doing something very important for your future.
When you use your 2nd mortgage to consolidate credit cards or any other bills, you will be saving a lot of money in interest. The average credit card has an annual percentage rate of 19% while a 2nd mortgage will have a percentage rate of about 4%. You will be saving literally hundreds of dollars a year and all of your credit card bills will be paid off. This will be a net benefit to your credit report and will increase your credit rating.
Your 2nd mortgage will increase your credit rating when you make your monthly payments on time, especially if your credit is already damaged. The Mortgage Company or bank will report your payments to the credit bureaus. As long as you make your payments on time, your financial institution will continue to report your payments, as being on time and your credit rating will continue to improve.
The on-time payments will be reflected positively in your report and will raise your credit rating. If you have a 2nd mortgage that is on the verge of being in arrears, you can refinance it and make your payments on time. By doing so, you will eliminate any negative marks by refinancing before it damages your credit rating.
If you already have a 2nd mortgage, you can refinance it to take advantage of lower interest rates. This will make the payments more comfortable for you; reduce the interest you pay on your loan, and it help increase your credit rating.
The main thing to remember is to make sure you have a clear understanding of your credit rating before you apply for a loan. Find out what the current mortgage interest rates are and determine if it is worth taking out a 2nd mortgage. Will your present credit rating allow you to obtain a lower rate? If not, then make efforts to keep the payments on your present 2nd mortgage current. The current payments will increase your rating and in time you'll be able to refinance at a lower interest rate.
A 2nd mortgage can and will help you increase your credit rating and all you need to do is keep your payments current. If you use the money to consolidate credit card bills, you will save on interest and help your credit at the same time. While taking a long vacation or a cruise around the world may be the thing you want to do with the money, it will be of better service if you use the loan to work for you in making your credit report an object of pride rather than shame.