Facts for People with Bad
Credit Score |
By Dillion Lenvo |
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Bad credit is a poor credit rating. People with a bad credit rating
have a history of late payments, skipping payments, over borrowing
on credit cards or declaring bankruptcy. Poor financial management
leads to bad credit. Spending habits, forgetfulness and lack of
organization result in a bad credit rating. Then credit reference
agencies give you a negative rating whenever you apply for a home
loan or a mortgage. Not to worry as you can still get bad credit
loans.
What is credit scoring
This is a statistical
method to analyze the applicants characteristics. With the help of
credit scoring the lender decides on the applicators qualification
for credit. Credit rating or credit scores are provided to lenders
by credit bureaus. The Federal Trade Commission site on consumer
issues gives details of credit scoring. Applicants bill-paying
history, the number of accounts, types of accounts, age of accounts
and amount of outstanding debt determine the scoring. Points are
awarded for each factor
Whether you are likely to repay the
debt
Whether you are likely to make payments on time (payment of
credit card bills, utility bills, student loans etc. are checked.)
Ration of the income to debt is another important factor. In worst
cases it is 60:40.
The length of time one has had credit is
also important as it shows how the applicant has handled credit over
a longer period of time. Make sure your report is accurate. Fix Bad
Credit Report if it is inaccurate. You could go online to find the
various credit reporting agencies that could provide you, your
credit report for free.
Obtaining Credit
A check on
the credit of the loan applicant is done by potential lenders before
granting mortgages, personal loans, refinancing or other loans. The
three agencies that are primarily used are Trans Union, Equifax, and
Experian. The lender does not rely only on credit scores to give you
the loan but checks three factors Capacity, capital and Character.
Capacity indicates your ability to make payments on time. A steady
job, your salary and other payment determine this ability. If you do
not have a steady job and a good salary you cannot pay back easily.
Also if you are making payments for other loans you may not be able
to attain another if you do not have the capacity to pay back.
Capital is the total assets you have in stocks, banks and immovable
property. A sale of any of these assets could help you repay the
loan in case you are unable to work or your savings dwindles.
Applicants with more capital get bigger amounts in loans or
mortgages.
Character is determined by the promises you have
kept. This is an important factor as all lenders look to receiving
their payments at the right time.
An important consideration
is the applicants
Income to debt ratio also determines
whether you get the loan. The worst case this can be is 60:40.
Credit history of bill-payments
Has the applicant filed for
personal bankruptcy at any point of time?
Credit rating score
should be in the mean values, neither too high nor too low.
incase of earlier debt they type of debt you have is considered
(installment or revolving debt).Revolving debt is applicable by
credit card companies.
Many people like to erase bad credit;
you could go to credit repair services that are non-profit. Get
their help to organize your payments and finance. You could avail a
debt consolidation loan and get even on bad credit scores.
http://www.iamcreditfit.com gives you the best info on Bad Credit
Loans , Bad Credit Rating etc. Also included are articles on
identity theft and corporate credit ratings. |
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