Generally speaking, "good credit" means paying
your bills on time and maintaining a personal
financial profile that helps to make lenders
confident that you will make payments on time.
Good credit also means that you are not
"overextended" or borrowing so much that you
are putting yourself at risk for financial
Good credit makes it easier to get a loan when
you need it, and helps you get lower interest
rates when you borrow.
Take a few minutes to learn about credit,
credit ratings and how to avoid overextending
Why is credit important? Good credit makes it
easier to get loans, credit cards, and better
interest rates when you borrow. Credit problems,
on the other hand, make it harder to get a loan
or lower interest rate often when you could use
some help the most.
Unfortunately, credit problems don't go away
overnight. Late payments a year or more ago can
affect your credit history today.
Major problems, like bankruptcy or a loan
default, appear on your credit record for years.
What lenders look for:
Lenders evaluate credit risk, the likelihood
that a borrower will make payments on time and
pay off the loan. Some lenders have very strict
guidelines and evaluate borrowers "by the book".
At Family Trucks and Vans we're dedicated to
getting the whole story so we can work with you
to find a loan solution that's right for you.
To judge credit risk, lenders typically look at:
Regular and documented income from earnings,
commissions, investments, rental payments and
other sources. Lenders look for a steady income
from month to month and a stable work history.
Savings, investments, retirement funds, cars and
other valuables that are "liquid" or easily
converted into cash.
Debts such as mortgage loans, home equity loans,
credit card balances, car loans, student loans
and other consumer debt.
Other Financial Information:
Situations that could affect payments, such as
lawsuits, collection activity, recent bankruptcy
or property foreclosure, obligation to pay
alimony or child support, or being a co-signer
on another loan.
Making timely mortgage or rent payments is very
important. Paying late just once by 30 days or
more can affect both the loan and the interest
rate offered you. Late payments on credit cards,
car payments and other bills are also factors.
National credit bureaus collect information and
provide reports to home lenders and other
creditors. Credit reports include details on
credit accounts and information on your payment
Monthly debt expenses and income get converted
to a debt-to-income ratio. While there isn't a
standard, lenders often have a maximum number
that they will allow a borrower to have.
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