Credit scores are issued by three major credit agencies (Experian, Equifax, and Transunion). They all use a custom method. The higher the number, the less risky you are as a borrower. Certain things may have a harmful influence on your figure and can possibly stop you from being approved for a loan. The following are precautions for potential NY home buyers on credit issues that affect the ability to get a loan.
Credit Issues That Affect The Ability To Get A Loan
Tardy Loan Payments
Missing payments indicate poor credit behavior and as a result reduce your ranking. How many payments you have missed (30, 60, or 90+ days) and the number of occurrences also have an impact. Late payments stay on your credit profile for seven years.
Accounts Submitted to Collections
If you are really behind on payments and a loan provider has given up on their own efforts to retrieve funds from you, they may assign your debt to a collection agency. This is included in your credit profile. A payoff does not clear this from the profile.
If a lender is unsuccessful in obtaining the full balance due to them, they may "charge-off" the the difference. This may apply if you neglect to send payments or if you settle for a lower amount. Settlements appear on your credit file for seven years. New lenders will see this charge-off and wonder whether you will repeat that behavior.
Matters of Public Record
Bankruptcy, tax liens, judgments, foreclosures, and other legal events are a matter of public record. Regardless of whether you resolve these accounts, the initial reporting will appear in your credit score. Particular things stay for seven to ten years and others (such as liens) will never be cleared. Clearly, it is important not to let overdue accounts get this serious.
Precautions For Potential NY Home Buyers
All of the credit issues that affect the ability to get a loan discussed above make you a high-risk client and will possibly result in higher interest rates or completely prohibit you from getting loans. Demonstrate responsible payment patterns and it will save time, money, and heartache when it comes to buying real estate. These are the best precautions for potential NY home buyers. Keep in mind that this represents only a few typical credit mistakes. Consult a financial advisor for information on your particular situation.