How does your credit score effect whether or not you get a loan? There are many ways that a credit score will effect your ability to get a loan, and it isn’t your score per se that hurts you, but the reasons why you score are so low is what is going to hurt you. The higher your credit score, the better chance you have of getting a loan. The lower your score, the lower your chances of getting a loan are.
Why is this? Your credit score is based on a number of factors, but the biggest one is whether or not you are able to make payments on time. A missed payment of 30 days is going to lower your score, and a missed pay of 60 to 90 days is going to lower your score even more. A missed payment could have you denied in a heartbeat.
If you are going to get a loan, you are going to have to show your credit report to the lender so that they can make a decision on your credit worthiness. If the score is lower, you are going to have a hard time explaining to the lender why you deserve a loan. The lender isn’t going to like the fact that you have missed payments, or other blemishes on your credit report.
You cannot blame the lender for wanting to make sure that the money is repaid. The lender is a business and not a charity. Handing out money that will never be paid back is not a good business decision. Getting a loan with poor credit means that you are going to pay more for that money. It is a higher risk for the lender to lend the money, so they want a bigger return on that risk.
As a borrower, it is up to you to make sure that you have the credit score necessary to get the loan. Other things to think about are how much credit you are using, how many loans you have currently and if you have applied for a loan recently. These all affect your credit score, so keep that in mind before you do something big like decide to apply for a home loan.
Credit is a very important aspect to your life and you need to know what to do in order to get the credit that you are going to need in order to build your life. Make sure you are paying your bills and make sure that you are clearing space on your other lines of credit so that you look as good as you can for when you apply for a loan.