Understanding a lender's view of credit scores can help you whenever you apply for a new credit card, car loan or home equity mortgage.
Lenders use your credit score to determine their risk factor in loaning you money and how much interest to charge you.
So a lender's view of credit scores can make or break you.
As Rick Harper, director of the National Foundation of Credit Counseling, once said, "The more the public understands scores, the more confident they can feel about the home-buying process and the less likely they are to become victims of predatory lending.
" Knowing what your lender knows empowers you.
If your score is low, you can take the steps to improve it.
If it's high, you can use your knowledge as leverage to negotiate better terms.
Credit scores are commonly referred to as FICO, named after the Fair Isaac Corporation that devised the formula used to determine scores.
Your FICO score will range from 300 to 850.
And, although each lender will interpret your score in their own way, most consider scores over 700 to be good to excellent, while scores under 650 are generally considered risky.
But, credit scores are not the only factors lenders consider when you apply for new credit.
Lenders will also look at your credit history, as well as your employment and earnings history to make credit decisions.
That means lenders could extend you credit even though you have a lower score.
While, at the same time, they could deny you credit with a high score.
Credit scores are not permanent.
They can actually improve from day to day as you control your spending habits, pay down bills and allow time for past negative marks to drop off your credit report.
In fact, in as little as a month or two, you can add a hundred points to your score and totally alter a lender's view of your risk factor as a borrower.
For example, did you know research shows nearly 80% of all credit reports contain easily correctable mistakes and over 25% of these are serious enough for lenders to deny you credit or charge you much higher interest and fees? Just cleaning up these mistakes, which is a fairly easy process, could possibly save you thousand of dollars over the term of a mortgage.
Can you imagine how much your score would improve and how much you could save if you also paid off your past due accounts and had records of late payments erased from your report? It's been said that "Knowledge is power" and nowhere is it more true than in knowing a lender's view of credit scores.
In the past, the problem for the borrower was that the lender had all the knowledge and, therefore, all the power.
But that's not the case anymore.
Today, you can go into a lender's office to negotiate a loan with copies of your credit reports and credit score in your hand and know as well as they do where you stand and what your odds are for getting a good loan at a good price.
And that puts power in your hands!
Lenders use your credit score to determine their risk factor in loaning you money and how much interest to charge you.
So a lender's view of credit scores can make or break you.
As Rick Harper, director of the National Foundation of Credit Counseling, once said, "The more the public understands scores, the more confident they can feel about the home-buying process and the less likely they are to become victims of predatory lending.
" Knowing what your lender knows empowers you.
If your score is low, you can take the steps to improve it.
If it's high, you can use your knowledge as leverage to negotiate better terms.
Credit scores are commonly referred to as FICO, named after the Fair Isaac Corporation that devised the formula used to determine scores.
Your FICO score will range from 300 to 850.
And, although each lender will interpret your score in their own way, most consider scores over 700 to be good to excellent, while scores under 650 are generally considered risky.
But, credit scores are not the only factors lenders consider when you apply for new credit.
Lenders will also look at your credit history, as well as your employment and earnings history to make credit decisions.
That means lenders could extend you credit even though you have a lower score.
While, at the same time, they could deny you credit with a high score.
Credit scores are not permanent.
They can actually improve from day to day as you control your spending habits, pay down bills and allow time for past negative marks to drop off your credit report.
In fact, in as little as a month or two, you can add a hundred points to your score and totally alter a lender's view of your risk factor as a borrower.
For example, did you know research shows nearly 80% of all credit reports contain easily correctable mistakes and over 25% of these are serious enough for lenders to deny you credit or charge you much higher interest and fees? Just cleaning up these mistakes, which is a fairly easy process, could possibly save you thousand of dollars over the term of a mortgage.
Can you imagine how much your score would improve and how much you could save if you also paid off your past due accounts and had records of late payments erased from your report? It's been said that "Knowledge is power" and nowhere is it more true than in knowing a lender's view of credit scores.
In the past, the problem for the borrower was that the lender had all the knowledge and, therefore, all the power.
But that's not the case anymore.
Today, you can go into a lender's office to negotiate a loan with copies of your credit reports and credit score in your hand and know as well as they do where you stand and what your odds are for getting a good loan at a good price.
And that puts power in your hands!
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