Are You Prepared To Apply For A Loan?|
by Gage Wazein
The first step in applying for a loan as an informed
consumer is to know 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.
To more efficiently achieve success with your loan, it is
important to know your credit or FICO score before you
apply. The accuracy of your score is just as important as
learing your score itself. Appropriate reasearch will
prevent any unwelcome surprises at application time as well
as allow you to correct any errors that may effect your
There are three major credit-reporting agencies. They are
known as Equifax, Trans Union and Experian. As stated
before, accuacy is imperative. Because not every agency
carries identical reports, it is important to obtain a copy
from each one.
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
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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