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How to become a fit borrower

If you are in the market for loan, you are probably hoping that you can get the lowest rate possible and borrow the amount you need. Getting a great rate and the highest loan amount is going to be driven mostly by your ability to show that you are a low risk borrower.
 
What are the basics of being credit worthy?
There are three main criteria that will be the foundation: your past history with paying loans, your current amount of outstanding loan obligations and your history of paying other bills. All of these actions are factors in building your current credit score.
 
What type of FICO score will be needed to get the best rate and terms?
It will vary by institution but generally if you can get 750 or higher with your credit score you will be able to get the best deals. If you really want to overachieve, push that score above 800 and you might find the very best deals.
 
Are there ways to find your credit score without applying for a loan?
Yes, all of the major credit reporting agencies will give your credit report for free, once per year. You might also be able to get your credit score for free if you have loans at certain institutions and there are always free credit score services. It is just important to note that credit scores can vary slightly depending upon where you obtain the score because each agency has a unique algorithm to calculate your score.
 
How much does job history factor into credit worthiness?
Job history will play a role only in that the amount that you might be able to borrow because most lenders will want to see continuous employment and length of time on the job to approve people for the highest amounts. Bridged service in the same field is usually not a big concern for lenders.
 
Are there any activities that can quickly erode your credit worthiness?
Obtaining a large amount and number of new debt obligations in a short period of time is an activity that will hurt your overall credit worthiness. This can make lenders nervous because this can be sign of other financial concerns, especially if the new monthly debt payments are significantly higher than you had previously.
 
What will be important moves to be considered an excellent credit risk?
It starts with building a strong credit score of at least 750 or higher and this only comes with having different types of loans and paying them back on time. The second element is keeping your current monthly loan payment to income ratio less than 36%. Finally, building a bridged employment profile, even if in different industries.
 


Posted: 7/19/2019 with 0 comments

Categories: Buying a Car, Credit, Money Matters



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