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Check Your Credit Report Score Before Filing An Application For A Loan |
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Your credit history is reflected in your credit report score and this score is the main deciding factor that lenders consider when approving your application for a mortgage, car loan, and credit card or even for
insurance. Your credit report score is also instrumental in deciding the rate of interest that will be applicable, in case you get the loan. The higher your credit report score, the lower will be your interest rate and vice versa. As such, you have to take great care to keep the credit report score at a respectable level so that you don't end up paying high interest rates and thereby lose money. To determine whether you can be trusted with other people's money, creditors share with each other all the information on your credit report such as: what bills have you been late on? How free and loose are you with credit cards? Are you are a good risk? It is obvious that their decision will be based on what is there on the credit report and as such you should get hold of your credit report and get to know your credit report score before you walk into a car dealership or a mortgage banker's office or make a credit card application. Your credit report is available online from Equifax, Transunion, and Experian. You should also get your credit report score, and you may have to spend $15. Although the credit report score may differ slightly at each, one will be enough if there is no problem. The credit report score is basically classified as follows: You are categorized as a prime borrower if your score is above 680. This puts you in the prime class and you get a good APR on a loan or credit card. However, if your score is below 680, you are put in the sub-prime rates and you will have to pay more for any loan. If your score falls below 550, you will have no hope of getting any type of loan. To understand how the credit report score is affected by various factors, you should know that the score is based on information in your credit report. So, you should get a copy of this report and study it. The following factors are important: Credit history: As there can be no score unless there is a history, you have to start the process by having credit accounts, credit cards or loans over a period of time. Payment history: This is the prime factor which influences most decisions. If you have been paying bills on time you will be considered reliable enough to get a loan and that too at a low interest rate. Your credit report score will be much better also. Bankruptcies: Obviously, bankruptcies lower the credit report score considerably. Amount of debt: The amount of open credit on your credit cards and whether you have maxed out all your credit cards are the factors which lenders look into. Too much of this potential debt can affect your credit report score. Requests for new credit: Your credit report score will get lowered if you make too many attempts to borrow money or open new credit cards. It is better to do some research and make only one application that you may be serious about. Types of credit: If you only have a secured credit card (cards requiring you to pay their balance in full each month) you will be seen as riskier than others who show they can handle different types of debt. You should, therefore, check your credit report score and credit report before applying for a loan so that you can repair any mistakes. If your score is low, the only way to improve it is to pay your bills on time. If you continue doing so, you will find that the credit score will rise. |
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