Are You Prepared To Apply For A Loan?|
by Gage Wazein
Obtaining a loan is a financial journey and the first stop
is knowing your credit score. Your current fiancial
situation directly affects your ability to obtain a loan as
well as partially dictate your financial freedom in the
future. You must be prepared before you apply for a loan,
and discovering your limitations and will predict what type
of loan is realistic and right for you.
First off, before you apply for your loan there are some
simple steps you can take to save time and money. One of
the most important areas is your credit score. It is
important to know your credit scores before you apply for a
loan. Knowledge is power. By knowing your scores before
you apply, you won't be surprised and can correct any
possible errors on your report.
There are three major credit-reporting agencies. They are
known as Equifax, Trans Union and Experian. As stated
before, accuacy is imperative. Because not every agency
carries identical reports, it is important to obtain a copy
from each one.
What exactly is your credit score? Your credit score is a
number derived from a pool of information consisting of
bill payment history, how many and what type of accounts
you have, any record of late payments, collection actions
taken against you, the age of your accounts, and all your
outstanding debt. Creditors then apply a statistical
program to your information as well as the information of
your financial peers. Your actual credit score number is
then extracted from a system that awards points for each
factor you have that helps predict your likeliness to repay
said loan in a timely manner. Thus, the more points, the
better your score and the better your probability of
In more recent years, lenders have started relying a number
called your FICO score when considering you for credit.
Similar to the information obtained by Equifax, Experian or
Trans Union, FICO is mathematically generated based upon
your credit report. This generated number is then compared
to millions of other consumers resulting in a very accurate
assesment of your financial strenght and competence. Just
as your credit score, the higher your FICO score, the
better your chance of earning loan approval.
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