Credit and Consumer Loans
If you want to get a consumer loan, you must have credit to do so. You should know a little about how this works before you apply for your first loan. You don’t have to know everything, but you should know a little. Knowing about this information could save you from unscrupulous lenders wanting to take advantage of you.
You will want to do research to help you find a reputable lender that can help you to find the perfect loan. One place that you can search is https://www.forbrukslånsammenligning.com/. This company can help you to find the right loan for you.
What Do You Need to Know About Credit
- Score – your score has five features – new credit, credit utilization, length of credit history, payment history, and credit mix. Payment history is how well you make your monthly payments and how often you fail to make those payments. Utilization is the measurement of how you utilize your debt – if you use less than 30% of what is available to you, your score will be higher.
Length of history is how long you have had a credit history and how well you’ve utilized it. New credit is just what it sounds like – your newest loans and cards. Mix is the different types of credit that you are using – the number of loans compared to the number of cards, etc.
- Reports Vs Scores – these two are not the same – a report is how you have used your credit and how you have made your payments on your accounts. A score is the number that is assigned to how well your credit is – it includes everything on your report.
- Negative Items – negative items will eventually fall off your report – they don’t stay there forever. Negative items can include late payments, foreclosures, repossessions, and collection accounts. As long as your spending habits improve over time, these negative items have less and less impact on your score. Most negative items stay on your report for seven years, except a bankruptcy which can stay there for up to ten years.
- FICO Scores – these scores can be between 300 and 850 – the higher the number the better score that you have. There are more models than just the FICO model, but this one is the most used and most well-known. Scores that are considered good are about 670 to about 739, very good would be about 740 to about 799, and excellent scores are above 800. The higher the score the better chances you have to get good loans and cards.
- Lenders Use FICO Scores – most lenders will use the FICO scores to assess your history and to determine if they want to loan you money or not. That means that most items that you apply for – home mortgage, auto loans, personal loans – will depend on your score. That is why you need to make sure that you keep your FICO score clean and up to date. You can do this by checking out your report and removing any false information and paying off your old debts.
- Different Types of Scores – there is more than one type of score even though people tend to think of them as one score. There are different agencies that give different scores, and different lenders will use different scores that fit their industry. For example, auto lenders have different scores because of the unique issues that auto lenders have. The best thing that you can do about these different scores is to make your payments on time and in full.
- Checking Your Own Report Won’t Hurt Your Score – you can check your own report as often as you like, and it won’t hurt your score. You can check your report to make sure that there are no mistakes on it and to see if you can pay off your past debt. You also might want to check your report so that you know where you are at when you want to apply to new loans.
- You Can Check Your Information for Free – you can get a free annual report by going AnnualCreditReport.com to see where you stand with your report. This site gives you information from all three bureaus so that you really make sure that everything is correct on your report. There are other companies that promise you free reports and scores, but there are also people who want to scam you, so be careful with who you choose.
- Your Score Can Cost You Money – if you have a low credit score, it is because you haven’t paid all your bills on time, that you take out too much debt, or that you have other issues with your credit. When lenders see that you have a low score, they know that they might have issues with you paying your bills on time. They will take this into consideration when they are quoting you interest rates and other fees that might go along with your loan. The lower your credit score, the higher your interest rate will be.
- Canceling Old Cards Can Lower Your Score – you have to remember that there are two things that are looked at for your credit score – credit utilization and length of history. If you cancel an older card, you could affect the length of history and you will also affect the credit utilization since you are using fewer cards. Instead, you could carry a zero balance so that you will have the same number of credit cards and the same utilization score.
- You Can Get a Loan With Bad Credit – there are specific loans out there for people who have bad credit. You will have higher fees that go along with your loan such as origination fees and interest rates, but you will most likely still be able to get a loan. You might also need to have some sort of collateral that you need to put down to guarantee your loan. You could also build your chances with a credit builder loan. These are loans that you pay on each month, and then when you get to a certain amount or length of time, you will be able to get your loan.
- Credit Score and Other Deciding Factors – lenders will look at other things besides your score to decide on giving you a loan. They will also look at your employment history, your income, your address history, and many other factors. If you have a steady income and have had a steady address for many years, that looks favorable on your application. This shows that you are reliable even if you have had trouble with your debts in the past.
- Credit Reports and Fraud – your credit report can help you to point out fraud by showing if other people have used your information to open up loans or credit cards. If you check your credit report regularly, you will be able to spot any fraudulent accounts quickly. You can report this and then do what is necessary to correct the issues with your credit.
If you want to get a new loan or credit card, you will need to check your credit report often – you can do this with no cost to you and no damage to your credit report. There is a lot of information that you need to look at before you apply for a loan. If you check out your credit report, you will be able to see if you will get a loan or not. You will also be able to fix any mistakes that you might have on it. If you fix all your mistakes and pay your debts on time, you will have no issues getting a loan in the future.