How Bad Credit Scores Affect Loan Eligibility
If your dream is to own your own home, but you unfortunately have bad credit, there's still hope out there for you. Although you'll have more trouble securing a loan than someone with good credit, with a little education on credit scores and how they affect mortgage rates, you'll be better armed to point your research in the right direction.
You're going to have to be ready to get out there and sift through numerous bad credit lenders to find one that will offer you a reasonable deal. You're also going to have to prepare yourself to hand any prospective lender some serious documentation to sway them in your favor.
It's surprising to see how many people try getting a loan without knowing what their credit score is. In the case of mortgage loan, the score most widely used by lenders is the FICO score, named after Fair Isaac & Company, which is the company that calculates the score. Your credit score summarizes your credit history in one number and that number guides lenders in their loan approval decisions.
There are a variety of scores used by different financial institutions. Credit card companies have their variants, and so do insurance companies and car loan lenders, just to name a few examples. What doesn't change, though is this: the higher your score, the better you look. In all cases, the higher your score, the more likely your application will be approved and the better terms you will get.
You might be surprised to learn that you have more than one credit score. That's right! You have three of them, as each credit bureau has their own. While common sense might dictate that they'd all be identical, it's absolutely not the case, because the companies that report our credit activity aren't required to do so to all the bureaus. In order to get your complete credit profile (and not 1/3 of it), you should get your score from all three bureaus.
It's common knowledge that a sizable percentage of credit reports contain errors. When you receive yours, most experts recommend that you go through it with a fine-toothed comb in order to make sure that there are no mistakes there that make your file look worse than it really is. Any mistake you find should be signaled to the corresponding credit bureau for correction. Remember to followup (usually within a month's time) to make sure that appropriate action has been taken and that your information is now accurate.
A poor credit record often results in people telling themselves that now that their credit is in the dumpster, all hope is lost. So they see no benefit in trying to understand how the credit scoring system works. It can pay great dividends to find out more about it when dealing with, for example, sub prime mortgage lenders. You will find yourself able to negotiate better deals with them or you might just try to improve your credit so you can get better loan terms altogether. When it comes to financial matters, ignorance is definitely not bliss.
You're going to have to be ready to get out there and sift through numerous bad credit lenders to find one that will offer you a reasonable deal. You're also going to have to prepare yourself to hand any prospective lender some serious documentation to sway them in your favor.
It's surprising to see how many people try getting a loan without knowing what their credit score is. In the case of mortgage loan, the score most widely used by lenders is the FICO score, named after Fair Isaac & Company, which is the company that calculates the score. Your credit score summarizes your credit history in one number and that number guides lenders in their loan approval decisions.
There are a variety of scores used by different financial institutions. Credit card companies have their variants, and so do insurance companies and car loan lenders, just to name a few examples. What doesn't change, though is this: the higher your score, the better you look. In all cases, the higher your score, the more likely your application will be approved and the better terms you will get.
You might be surprised to learn that you have more than one credit score. That's right! You have three of them, as each credit bureau has their own. While common sense might dictate that they'd all be identical, it's absolutely not the case, because the companies that report our credit activity aren't required to do so to all the bureaus. In order to get your complete credit profile (and not 1/3 of it), you should get your score from all three bureaus.
It's common knowledge that a sizable percentage of credit reports contain errors. When you receive yours, most experts recommend that you go through it with a fine-toothed comb in order to make sure that there are no mistakes there that make your file look worse than it really is. Any mistake you find should be signaled to the corresponding credit bureau for correction. Remember to followup (usually within a month's time) to make sure that appropriate action has been taken and that your information is now accurate.
A poor credit record often results in people telling themselves that now that their credit is in the dumpster, all hope is lost. So they see no benefit in trying to understand how the credit scoring system works. It can pay great dividends to find out more about it when dealing with, for example, sub prime mortgage lenders. You will find yourself able to negotiate better deals with them or you might just try to improve your credit so you can get better loan terms altogether. When it comes to financial matters, ignorance is definitely not bliss.
About the Author:
If what you need is a specific type of bad credit loan, such as for example bad credit home loans in atlanta GA, make sure you visit my personal finance blog where you'll find plenty of sensible financial advice..
posted by Credit Counseling at
4:33 PM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home