GETTING THE BEST LOAN WITH POOR CREDIT
Recently, as a result of consumer's making late payments and/or
defaulting on their loans, lenders are making
it more difficult to borrow. In fact, the
recently reported that 20 percent of U.S. banks began tightening
their credit standards at the conclusion of 2006.
The areas where
loan approval criteria has become more strict
has occurred mainly in the subprime and Alt-A markets.
Subprime financing is for borrowers with bad credit histories.
impact of having poor credit varies. Alt-A primarily includes borrowers with better credit quality
who don't want to document their income on their loan
On the contrary, as a result of the overcapacity in the
industry, banks are very eager to lend to those with strong
credit. Therefore, those with good credit, known as prime, are
still able to achieve very competitive rates and terms for their
Preferably, then, in today's lending circuit, you want to be
measured as a prime borrower. There are a few important tips you
can follow that will help ensure that you become one and get a
personal loan. One of the
key aspects is to begin developing your financial profile as
soon as possible.
loan tips section will help you get approved for your
Pay Down Balances
Your FICO score is likely going to be the most impacting
factor of your loan application. FICO is short for Fair Isaac
Corp., which computes the rating. Scores range from 300 to 850.
The median FICO credit score is 720. Borrowers that encompass a
score of 700 or higher are typically considered prime.
Since 30 percent of your FICO rating is made up of your credit
utilization ratio. More specifically how large your balances
compared to your available credit limits. One of the quickest
methods for improving your credit score is to pay down your
It is recommended that you try and stay below 50% of your
limits. Obviously, the lower you keep your balances, the better
your score will be.
Pay on time
Your payment history is also very important. Specifically,
how often you pay your bills on time, or late.
If you are late on a payment, it will be reflected on your
credit report for seven years. However, as time passes, its
impact on your score, will steadily diminish -- that is as long
as you continue to pay your bills on time.
In fact, after six months of on-time payments, you expect to see
your credit score slowly improve. After one year, you will
notice an even more significant jump.
Avoid any form of new credit
Store credit cards are very enticing, usually offering 20
percent off your first purchase.
Credit cards also offer
inviting introductory offers.
However, if you are going to refinance a mortgage, or
apply for a
personal loan, do not establish any new lines of credit. The
amount of times you apply for any type of new credit makes up
about 10 percent of your FICO score. The less you have, the
better. Otherwise, it may appear as though you are going on some
sort of credit spree.
Check your credit report
It is very important that you obtain a copy of your credit
file at least a few months prior to submitting a request for a
mortgage or an
It is very likely that you will discover errors. In fact, it was
recently reported by the U.S. Public Interest Research Groups
that up to 77% of credit reports contain some sort of mistake,
some significant enough to result in the denial of credit.
Under federal law, you are permitted to obtain a free copy of
your credit report from each of the three main credit bureaus -
Experian, Equifax, and TransUnion - every year. Visit,
AnnualCreditReport.com or call 877-322-8228.
Simple errors and mistakes, i.e. misspelled names, can be
disputed over the phone or via the Internet. misspelled name.
However, some items are going to be harder to fix than others.
Get more info on what the
hardest items to fix are. More crucial errors should be
disputed in the form of a
letter. This way, you will have a paper
trail of your complaint. The best coarse of action is to send a certified letter with a return
receipt requested to the creditor, as well as the reporting bureau.
The bureau is required by law to investigate your claim within 45 day of
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