credit credit history credit report credit score interest rates

Credit Scoring And Risk Factors

Credit score is a critical factor when one of the factors to consider when determining whether or not you will qualify for a mortgage loan.

To begin with, all mortgages are going to be assessed on the first $1,000 of the price tag. This time, the lender considers the cost that the borrower has to pay in the course of attempting to get the loan.

Estimating the cost of qualifying for a mortgage loan can sometimes be confusing because lenders are assuming that even though the borrower has a reasonably good credit history, he’ll be able to get a mortgage loan – even though the amount paid could be more than what the borrower has to pay in the course of securing it.

So, how do lenders assess a mortgage loan?

Well, lenders will report a credit score that measures approximately 620 by 700. This number is taken from information provided by lender’s independent database.

Once again, this score is taken from all of the information providers that provide information on a person’s credit report. Thus the number lenders have on a person can vary from 1 to 4, and so the data provided by each lender can vary substantially for that individual.

It is therefore important to get a good idea of what a poor credit score means for you.

There are several different factors that a lender will use to calculate a loan amount including:

Annual fees.

Interest rates.

Types of loans that a person has applied for.

Loan-rate structure.

Rate changes.

How long it would take for you to qualify for a loan if you are not able to get a comparable loan.

This leads onto another important issue of credit scoring: the interest rates.

When lenders consider a loan amount, interest rates are taken directly from the total annual percentage rate (annualized interest expense) or FICO. The FICO number is an important check in determining if you’re ready for a loan or not.

The FICO number for a loan depends entirely upon the amount you would have to pay in interest if you have a bad credit history.

Therefore, unless you are planning on applying for a loan with a high rate, you should definitely be considering a low rate loan, especially if you are able to pay the amount back within one year.

So, there you have it, a good tool in the arsenal of lenders today. Here are some tips on how lenders assess a mortgage loan based on whether or not you are a good risk to be loaned, and also below are some tips on exactly what lenders consider to be a good risk for you.

Credit Score Credit Score

The Credit Score is a nationally representative composite of credit risk factors. Credit score, commonly referred to as a ‘central credit score’, was one of the first nationwide national credit scores. Equally as important to credit score is credit history. You see, until the 1920’s, credit history was mostly unknown – until, of course, the day after World War II ended in bitter Soviet Union. Today, credit scores are widely used by businesses, financial institutions, mortgage lenders, education and purchase management agencies, retail and auto financing firms, insurance companies, and corporations.

What is a Credit Score?

A credit score is an index of a consumer’s credit history. Each time a consumer reads a loan statement, credit report, or fills out an application for credit, his or her credit report is scrutinized by a computer algorithm. The evaluation algorithm then determines the ‘correct repayment’ for every erroneous payment or filed by a delinquent consumer. This analysis is called credit bias. The Fair, Isaac Corporation defines ‘credit score” as a score that accurately reflects the characteristics of a consumer and reflects their use in making a credit decision.

A credit history is considered an important factor in determining the credit worthiness a consumer will have when applying for credit. There are three major credit bureaus, Experian, Equifax, and TransUnion. Thus, a lender may receive credit report from all three bureaus, but not necessarily all 3. A consumer’s report may contain other information, such as income, employment details, etc., that is not part of a consumer’s credit report but is included to aid in improving a consumer’s credit history. It is important to note that some consumer credit scores may contain other information, such as the applicant’s previous addresses or phone numbers, that, in the opinion of the score, does not indicate a likelihood that the applicant will have a problem getting a credit or better terms for the loan.