|
You may have been told that you
have got what is labeled as ‘bad credit’, but what
does that really mean and what can be done about it?
Companies use data from your
credit history to work out what is known as a FICO score.
This score basically helps lenders to establish how ‘safe’ a
borrower is likely to be, i.e. whether or not he or she is
expected to be able to repay bills and credit on time, or
whether to refuse the home loan for people with bad
credit.
This form of credit scoring was
introduced in the 1960’s by the company, Fair Isaac, and
since then has continuously been accepted as the principal
credit scoring tool for financial institutions in the USA.
Where mortgages are concerned, a
low FICO score pretty much ruins your chances of approval,
unless you are able to find a company that specializes in
bad credit home loans
and bad credit mortgage
services.
How are credit scores
calculated?
A FICO score is worked out
according to a set formula which takes into account a lot of
different variables, such as how well you repay your bills,
how much money you are currently borrowing, what types of
credit you have and how many different credit cards you
have. All these factors are worth a specific percentage of
your final credit score, and one that seems to be the
sticking point for many is how long credit has been used
for. This contributes 15% towards your final credit score,
and for many, especially young applicants who have not been
borrowing for very long, this is where they fail with home
loan applications and other forms of borrowing.
Is there anything I can do about
a bad credit score?
Yes, you need to ensure that all
current credit is repaid on time as agreed with the lender.
You should also try to avoid borrowing money beyond your
means as this can have a significantly negating effect upon
your credit score and therefore your home loan application.
If the reason for your low credit rating is that you simply
do not have a long enough credit history, you need to boost
your score by acquiring more credit.
If you have bad credit we can
help just fill out a free quote and we will have a bad
credit home mortgage specialist call you with options.
|
