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How Lenders Determine Your Credit Report Score? |
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Credit report scores generally fall between 300 and 900 points. A credit report score of 700 is considered to be quite good. Such a score can comfortably guarantee you a loan whereas a credit report score in the range of 300-500 can have an adverse effect on credit rating and can subsequently have a negative impact on your chances as a borrower. There are three basic principles to qualifying for a mortgage loan. First, make it a point to pay your monthly bills on time. This is very important to mortgage lenders, as they want to judge your capability of paying your mortgage payments on or before the day agreed upon. Filing for bankruptcy, having your car repossessed or having a mortgage foreclosed will have a major effect on your credit report score and your ability to get new credit in the future. Second, pay down high balances. However, you should be a little cautious about closing any accounts. It has generally been observed that sometimes closing an account can adversely affect your credit report score. This is because closing an account can reflect poorly on credibility as a borrower. Closing an account might generate a notation from the bureau's computer. If you wish to close an account that was a part of a promotional offer, you should send a letter to the bureau stating so and also the nonusage of that account. Last, keep your credit report score accurate and up-to-date. You should periodically review your credit report obtained from the three major credit bureaus namely Equifax, Experian and Trans union. People who do not have any credit references on your credit report or just a few charge accounts can also qualify for a mortgage loan. They can obtain a mortgage loan even with a limited credit. With as few as one credit reference, it is possible to get a credit report score from a lender. A lender can also possibly develop a "nontraditional" credit report score for you. A nontraditional credit report contains information on how you manage financial obligations like rental payments, utility payments and other items that do not normally appear on a credit report. You do not necessarily have to maintain credit cards for this purpose. It is quite possible for people with a high credit report score of 600-700 to have several late payments noted on their credit report. The delinquencies in their credit report are recent, their balances on credit high and their credit history short. But they have very good credit report scores and that is what works in their favor. The lender in such cases checks to ensure the scores include all relevant information and finally approves their loan. Scores in the 650-750 category are almost always approved. At times, people with a high credit report score can also end up getting a denial for a loan they had applied for. This is because they may be having too many derogatory notes in the credit report like a serious delinquency in the credit report or a long history of opened and closed credit card accounts. They also may be having some discrepancy or miscommunication in their credit report that might not be working in their favor. For instance they might have missed a reminder of a particular payment and thus ended up making a late payment. Your high credit report score is definitely a positive factor working in your favor. But at the same time, checking your credit report for any errors also goes a long way in your improving your chances of securing a loan. It is extremely important to check and verify the information in your credit report score. This will help you in the long run as this will keep you posted about any errors or discrepancies in your credit report and timely intervention will avoid you being turned down for the loan you have so earnestly desired. It is your credit report score that needs to be attractive enough to assure your lender about your credibility as a borrower. Lenders can easily determine your creditworthiness the help of your credit report score. |
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