Latest Articles
Bad credit car loans: getting behind the wheels with bumpy credit
A car with bad credit, just like any other car, will give you
the ride you want. Okay, they might not be served on a platter
but if you need a car.... but they are worth the ride. Customers
suffer from bad credit circumstances do not mean they...
Tenant Loans Home Loan Homeowner Loan Best Home Loan UK
Tenant Loan
The finance and loan market in the UK is upbeat and it is quite
easy for most people to qualify for a loan even if they have a
bad credit history. Loans can be applied for in person, by
telephone or more commonly now, over the...
The Attractive Tax Break for Home Loans
So, you've decided on the house, you've researched your mortgage
product options, and you know which product you need. Have you
taken into consideration the tax advantages that are being
touted as an attractive benefit of the interest only loan?...
Understanding Credit Scoring And Its Affect On Applications For Mortgage Refinancing or Second Mortgage Loans.
For years, lenders have utilized "credit scoring" to determine
whether or not an individual is a good credit risk. Credit
scoring has recently become a hot topic, due in large part by
the mortgage lending industry's willingness to use the process
to evaluate one's likelihood of repaying home mortgage
refinancing or second mortgage loans. Even insurance companies
use credit scoring as part of their underwriting procedure when
writing automobile and home insurance coverage.
Credit scoring is a system, based on a statistical program,
which awards points for certain factors that help predict who is
most likely to repay a debt, such as a mortgage refinancing or
second mortgage loan. The total number of points, or score, is
what lenders use to determine an individual's creditworthiness.
A large random sample of customers is taken, and analyzed
statistically to identify characteristics relating to credit
risk. These factors are then given a weight based upon how
strong a predictor they are of who would be a good credit risk.
Credit scoring models do vary from lender to lender, but most
generally include the following factors:
1) Your current amount of debt as compared to your potential
total available credit
2) Payment history on current and previous accounts
3) The length of your credit history
4) The number
of credit inquiries (each time a creditor pulls
credit in response to your application)
5) The number of separate open accounts
6) Collection actions including judgments, repossessions,
foreclosures, and bankruptcies
Using the statistical program, lenders compare this information
about you to the credit performance of other consumers with
similar profiles. Therefore, it is usually more reliable than a
subjective or judgmental decision, because it is based on real
data and statistics. Although it may seem somewhat impersonal,
when used properly, credit scoring can allow creditors to
evaluate credit applications faster and more accurately than
individuals, in an impartial and unbiased manner.
In addition, the home mortgage refinancing and second mortgage
loan process has been shortened as a result of the speed in
which mortgage lenders can now make decisions utilizing the
credit score model.
About the author:
Bob Peckenpaugh is a professional mortgage planner with over 15
years lending and banking experience. He is a manager with CFIC
Home Mortgage providing both purchase and refinance
transactions. Bob holds a B.S. in Marketing and Management and
is Fair Credit Reporting Act certified. Mortgage
Refinancing and Second Mortgage. Phone: 1-800-943-9472.
Written By: Bob Peckenpaugh