Most consumers are unaware of the fact that pre-approval scoring does not necessarily mean approval. In fact, when lenders review your credit report they use this term to determine if you will be approved or not. Lenders use this information to determine if they should approve you or not. This is different from what is called approval which is determined by the lender. Lenders do not want to take the chance of approving someone only to have them go delinquent and not pay back the loan.
Why is a credit report used to determine if a borrower can get financing? The information on the report is used to create a credit score. The score is based on the amount of debt the consumer has compared to their income. This debt to income ratio is a good indication of whether or not a person will be able to make the monthly payments required for a loan. A high debt to income ratio will mean that a borrower will be a high risk to the lender.
When a lender sees that you have a high debt-to-income ratio, they will view you as a high-risk consumer. It’s likely that you will not qualify for any type of loan you apply for. Most consumers do not realize that companies use pre approval scoring to determine if they will even approve them for a loan. This is just one reason why credit scores have such a large effect on your finances.
How do companies get a copy of your credit report so they can do a pre approval score? Your credit report is always sent to them when you apply for credit or buy a car. They pull the credit report and look for mistakes in it. If there are mistakes in the report, they alert the credit reporting agencies to make the corrections and resubmit your credit report.
So how does a company pull a copy of your credit report and what are they looking for? They only want the items on it that they can verify. The item that most companies look for is a late payment. They know that if you don’t pay your bills on time you are going to get blacklisted on their pre approval scoring mechanism.
That is why it is important that you pay your bills on time to stay on their good graces. A late payment makes it look like you may be a high-risk consumer which will cause a number of negative things to come up on your pre approval scoring mechanism. The other negative thing that they look at is bankruptcies. A bankruptcy makes it look like you made a lot of irresponsible financial choices.
All of this is why it is very important that you make sure that you always pay all your bills on time. The best way to keep your credit score high is to maintain a good credit score. The only way that you can achieve that is to have an overall excellent credit report.
The bottom line is that your credit score is determined by many factors. They include how long you have been making payments on time, the amount of credit you have and how often you apply for new credit. As long as you make your payments on time and maintain an outstanding credit score you will have no problems getting the approval for any type of loan. If you do have a bad credit score there are still a number of options available to you.
If you have a low credit score then you probably know that you need to start cleaning up your credit report. The first thing that you should do is get a copy of your credit report from the three major credit reporting agencies. You want to check to make sure that all the information on your report is correct.
When you get your credit report, take a close look at any errors that are on it. Any inaccuracies will affect your score. If you find any incorrect information on your credit report you need to write and dispute it. This is the only way that you can get it corrected and approved.
Once you have your credit report squared away you are ready to apply for your pre approval loan. You want to make sure that you are always honest when applying for loans. If you try to fool them into thinking that you are too good of a risk then you just defeated your purpose. Make sure that you have your factors in order and your score will rise quickly.