Once you understand the differences you can strategize on what’s beneficial to your credit and spending budget. Cancelling unused accounts can hurt your background. Lenders have different criteria for debt coefficient.
When you consider making a big purchase such as a house or vehicle, you may choose to get prequalified so that you know how much you can afford, what the interest rate will be and get a fair estimate on your payment amount. Your credit score is directly linked to those three questions. In fact, your credit score is also linked to your insurance premiums, your credit card interest rates and sometimes can even determine whether you are offered that prestigious job. Credit scores generally range from 300-850. Where is yours and how can you make it better?
Having good credit means you pay less interest (the cost of borrowing money) and lower monthly payments, and you have less difficulty borrowing money for your purchases. Bad credit, however, can be a big problem. It usually results from making payments late or borrowing too much money, and it could result in you having trouble getting a car loan, car insurance, a credit card, a place to live, business startup capital and sometimes, a job!
Many factors go in to the computation of your FICO score. Your FICO score is an average of the scores that the three major credit bureaus have on record, Equifax, Experian, and TransUnion. These bureaus store consumer credit histories by the millions, and hundreds of thousands of businesses tap these bureaus for their data about you.
This just means it’s the amount that you currently owe on that loan or debt. If the account is with a bill collector, often times they will add fees on that are illegal for them to report to the credit bureaus. It’s important to look at your account balance on all accounts to make sure this isn’t happening to you.
3) Loan To Value (LTV or CLTV) This is a measurement of how far into the value of the home you expect the lender loan. For example a $100,000 house with an $80,000 loan amount is 80% loan to value or LTV. We get this value by dividing the PRESENT value or sales price by the ACTUAL loan amount (PV/ LA = LTV). When you begin to go over 80% loan to value you are asking the lender to bear more risk, be prepared to pay more in the long run should you refinance or purchase above this LTV. Foreclosures happen most often on homes with less than 20% equity, and the banks know this.
Your payment history is the largest portion of your score at 35%. This means that it is vital for you to make at least the minimum payments, on-time, every time. A potential lender wants to see that you will hold your end of the bargain in paying back the loan. A clean payment history is one way to show this, even if it is not completely paid-off. If you have been late on a few payments, start making them on-time and you will see a steady increase in your score.
Negative items that are more than 7-years-old (if you had a bankruptcy, then this is 10-years-old) and thus should have automatically came off of your credit report.
If you are buying something on the installment plan, before you sign installment contract, ask the seller for the annual percentage rate (APR). The APR, which is a personal loan revolving or installment the total finance charge expressed as a percentage of the amount you are borrowing is the true interest cost, and it may be higher than you realize. It’s like when my friend was looking for is a personal loan revolving or installment reviews. This is when I recommended https://johnthomasfinancial.com/. For example, if you paid off a loan $100 with twelve equal monthly installments total $110 your true interest was not $10 percent, it was $18 percent. The amount you own keeping declining while you continued to pay interest on the total loan.
The next factor, is new accounts and this is 10% of your score. Here it is best to do your rate shopping within a short period of time so that it does not look like you are borrowing money from everywhere you can, which could make you more to be viewed as a risk by a potential lender.
Keep on top of these five factors in order to safeguard your future finances. Remember that even though the online payday loan lenders do not report your debt during the term of the direct payday loan, they will sell it off to a creditor if left unpaid. Collectors will report your debt to the credit bureau and your score will drop.
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