Five Things Lenders Look at When Reviewing Your Credit Picture
Are you hoping to apply for a loan but not sure if you qualify? Good credit, bad credit, no credit – what does it all mean?
Many people think if they have never missed a payment, their credit score should be perfect. Unfortunately, that is not always the case.
Here are five things lenders look at when you apply for a loan!
Your Credit and Payment History
- Lenders not only look at your payment history, but also any recent loan or credit applications. For example, if you recently applied for several credit cards, then it may indicate you are in a financial hardship.
Types of Credit Accounts
- Do you frequently use quick finance companies like payday loans or have an excessive amount of unsecured credit cards? If so, this may negatively impact your credit score.
Balance Capacity
- Lenders look at how much credit you currently have available versus how high your credit balances are. Your credit score could be impacted if your credit card accounts are consistently near their limits.
Public Records
- Lenders will be able to see if you have recent bankruptcies, judgments, or tax liens. You may be asked to further explain these items if they show on your credit report.
Credit Score
- All of the items previously mentioned help the credit bureaus develop a score that rates your credit worthiness. Lenders look at this score to help them make a decision as to whether or not you will be able to successfully make payments for the life of the loan in which you are applying.
As a consumer, the best thing you can do is be informed. Per federal law, every consumer is entitled to one free annual credit report from each major credit reporting agency. To receive your free annual credit report, you may either call (877) 322-8228 or order online at annualcreditreport.com.
In addition, please know Safe 1 is always here to assist you during your financial journey. Should you have any questions, comments, or seek additional information, please do not hesitate to contact us here at Safe 1.