Credit behaviors and credit ratings are generated by three major credit agencies (Experian, Equifax, and Transunion). They all use a differing formulas to generate a numerical rating that reflects your credit risk. The higher the number, the better the credit rating. Certain things may have a adverse effect on your score and could possibly result in you getting turned down for a mortgage. Below are advice for potential Farmington Hills home buyers on credit behaviors that impact the ability to get a loan.
Credit Behaviors That Impact The Ability To Get A Loan
Missing payments demonstrate poor credit behavior and therefore will reduce your rating. The number of months you are late (30, 60, or 90+ days) and how many times you are late also play a role. Late payments stay on your credit profile for an extended length of time.
If you are really behind on payments and a credit provider has given up on their own procedures to retrieve money from you, they may move your debt to a collection company. The collection company notifies the credit agencies. The history will show in your credit file even if you pay off the debt.
If a lender is unsuccessful in obtaining the complete balance that you owe to them, they may “charge-off” the the leftover balance. This could occur if you entirely fail to send payments or if you settle for a payoff below the remaining owed. Settlements reflect on your credit file for seven years. Future lenders will see this item and assess whether you will continue with that behavior.
Publicly Recorded Offenses
Bankruptcy, tax liens, judgments, foreclosures, and other legal matters are recorded into public record. Regardless of whether you settle those items, the actual recording is reflected in your credit report. Certain things remain for seven to ten years whereas others (i.e. liens) will never be cleared. Obviously, it is critical to avoid letting accounts get this far.
Advice For Potential Farmington Hills Home Buyers
All of the credit behaviors that impact the ability to get a loan noted above make you a risky client and may cause higher interest rates or completely prevent you from getting approved for loans. Practice conscientious payment patterns and it will save you time, money, and disappointment when it is time to buy a home. These are the best advice for potential Farmington Hills home buyers. Remember that this details only a few typical credit mistakes. Speak with a financial professional for guidance on your specific situation.