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Your First Step in Applying for a Loan
by Gage Wazein
http://www.ftmloan.com
Obtaining a loan is a financial journey and the first stop
is knowing your credit score. Your current fiancial
situation directly affects your ability to obtain a loan as
well as partially dictate your financial freedom in the
future. You must be prepared before you apply for a loan,
and discovering your limitations and will predict what type
of loan is realistic and right for you.
First off, before you apply for your loan there are some
simple steps you can take to save time and money. One of
the most important areas is your credit score. It is
important to know your credit scores before you apply for a
loan. Knowledge is power. By knowing your scores before
you apply, you won't be surprised and can correct any
possible errors on your report.
Information about you and your credit experiences, such as
your bill-paying history, the number and type of accounts
you have, late payments, collection actions, outstanding
debt, and the age of your accounts, is collected from your
credit application and your credit report. Using a
statistical program, creditors compare this information to
the credit performance of consumers with similar profiles.
A credit scoring system awards points for each factor that
helps predict who is most likely to repay a loan. A total
number of points, a credit score, helps predict how credit
worthy you are, that is, how likely it is that you will
repay a loan and make the payments when due.
What exactly is your credit score? Your credit score is a
number derived from a pool of information consisting of
bill payment history, how many and what type of accounts
you have, any record of late payments, collection actions
taken against you, the age of your accounts, and all your
outstanding debt. Creditors then apply a statistical
program to your information as well as the information of
your financial peers. Your actual credit score number is
then extracted from a system that awards points for each
factor you have that helps predict your likeliness to repay
said loan in a timely manner. Thus, the more points, the
better your score and the better your probability of
receiving approval.
In recent years, more and more lenders are relying on
something called a FICO score whenever you apply for a
loan. Your FICO score is a number that is mathematically
generated based upon your credit report. This number is
then compared to millions of other people. This result
very accurately predicts how likely you are to pay your
bills. The higher your FICO score, the more likely you are
to get a loan approval.
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