Credit score is often a major factor, says Richardson, even though the processes and measures for determining creditworthiness will likely vary from lender to lender.
His statement that "your credit score encapsulates your credit history" rings true. But he adds that every financial institution uses its own formula to figure out whether or not a customer will be approved for a loan and, if so, at what interest rate.
Your income, the size of your down payment, and the value of your assets are also considered by lenders.
Lenders will make a deal based on your creditworthiness after that has been established. The best loan rates and terms are typically reserved for those with excellent or very good credit. In what ways can one determine whether or not they are creditworthy?
There are a plethora of no-cost resources available to help you learn about credit and how your actions may affect your score. Learn the facts. VantageScore and the Consumer Federation of America have created CreditScoreQuiz.org so that you can put your knowledge to the test and separate fact from fiction.
Be aware of where your credit stands at all times. The majority of banks and credit card companies now provide free access to your credit score. Use this feature to monitor your credit score for any unexpected drops or increases as you make positive changes.
Enroll in a free credit monitoring service today. Capital One's CreditWise is a good example because it's accessible to everyone, regardless of whether or not they have a Capital One card. In addition, it includes a credit score simulator that illustrates how various actions may affect your score. You may be able to see the results of your debt repayment or credit application with this tool.
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