Having a poor credit record doesn't necessarily mean that you're going to have to be a renter for the rest of your life. On the other hand, what it does mean is that you're going to have to educate yourself about credit scores and their impact on mortgage loan rates.
You'll find that having bad credit does not mean you won't find lenders willing to give you a loan. Instead it means that the loans you'll find will be at interest rates you probably don't want to have to pay. You'll also be asked for much more documentation to support your application.
Fair Isaac & Company (better known as FICO) is the leading company when it comes to calculating and assigning credit scores. Their score (the FICO score) is the one most often used by lenders. Knowing your FICO score gives you a pretty good idea of how prospective lenders will view your credit application and whether or not it has a good chance of being approved.
Depending on the financial institution you're dealing with, they'll be using a slight variant of your credit score. Most notably, credit card companies, insurers, and car loan finance companies are known to base their decisions on specific variations of the standard score. The one thing that doesn't change is that a higher score means a higher approval chance and better terms in case of approval.
In case you didn't know it or it slipped out of your mind, you have three credit scores, not one. Because all three credit bureaus work independently, and because there's no legislation requiring that credit information be reported to all three bureaus, your credit file will vary from one to the other. The only way to get as accurate a snapshot of your credit profile as possible is to order your credit score from each one of them.
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.
Often times, once people find out that their credit is shot, they pretty much give up on the credit system entirely and don't even bother trying to understand how it works so they can turn things around. The problem with this attitude is that their credit remains bad. But if they had taken the time to educate themselves, they could have made better financial decisions for their future, either by being more savvy when looking for a bad credit loan, or by doing what it takes to improve their credit and be eligible for a standard loan.
You'll find that having bad credit does not mean you won't find lenders willing to give you a loan. Instead it means that the loans you'll find will be at interest rates you probably don't want to have to pay. You'll also be asked for much more documentation to support your application.
Fair Isaac & Company (better known as FICO) is the leading company when it comes to calculating and assigning credit scores. Their score (the FICO score) is the one most often used by lenders. Knowing your FICO score gives you a pretty good idea of how prospective lenders will view your credit application and whether or not it has a good chance of being approved.
Depending on the financial institution you're dealing with, they'll be using a slight variant of your credit score. Most notably, credit card companies, insurers, and car loan finance companies are known to base their decisions on specific variations of the standard score. The one thing that doesn't change is that a higher score means a higher approval chance and better terms in case of approval.
In case you didn't know it or it slipped out of your mind, you have three credit scores, not one. Because all three credit bureaus work independently, and because there's no legislation requiring that credit information be reported to all three bureaus, your credit file will vary from one to the other. The only way to get as accurate a snapshot of your credit profile as possible is to order your credit score from each one of them.
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.
Often times, once people find out that their credit is shot, they pretty much give up on the credit system entirely and don't even bother trying to understand how it works so they can turn things around. The problem with this attitude is that their credit remains bad. But if they had taken the time to educate themselves, they could have made better financial decisions for their future, either by being more savvy when looking for a bad credit loan, or by doing what it takes to improve their credit and be eligible for a standard loan.
About the Author:
If what you need is a specific type of bad credit loan, such as for example to own a home with bad credit in atlanta, make sure you visit my personal finance blog where you'll find plenty of money-saving tips.
No comments:
Post a Comment