A FICO (Fair Isaac Company) score is the first deciding factor in how a banker or cooperative review your request for a loan. There are three main agencies that creditors send data from their monthly debtors whom consider in a credit report they are: Experian , Equifax and TransUnion
Lenders may use one or a combination of the three agencies to issue a decision on a loan and to decide whether you have Good vs Bad Credit. A final decision may also be based on your employment history , the relationship between debt and income and how much money you have saved in the bank.
Today it is very difficult but not impossible to maintain good credit . A good credit rating will make you pay less interest on a loan. But what is considered good credit? The minimum score scale good credit usually a FICO score ranges from 650 to 720 Your credit score is determined by a variety of factors, including past credit history, your current income and debt ratio and the unsecured debt like a credit card against other secured debt such as a mortgage.
If you found out that your credit is bad , you should contact all creditors adversely reported on your credit report to see if there is a way to work with them to arrange payment or even get the bad mark is removed from the credit report. It is always advisable to contact a professional credit counsellor for information on your particular circumstances and achieve good results.
How does foreclosure effect my credit?
This is a fundamental question that you should ask yourself when you face a foreclosure judgement. An execution of foreclosure affects the large-scale credit . Your credit score can place your FICO up 250-280 points lower for seven years.
It is said that “time heals all wounds ” and this is especially true when it comes to your credit rating running, your credit score is always changing and this will increase with time .
To move forward with your heads held high, you can focus on making payments on time and educate yourself on how your buying behaviour affect both short and long term financial goals . You must be disciplined and act on a financial plan.
How does a short sale of the property affect my credit?
Facing a possible foreclosure of the property is an exasperating experience . A short sale will definitely affect your credit ; however, on the same scale as in running. Typically, a short sale will lower your credit score 80 to 100 points. Writing voluntary surrender of property ( Deed in Lieu of foreclosure ), instead of a performance makes your credit score falls around 120-175 points. Clearly, it is the interest of the owner and the investor make a short sale sale or sell the house by other means before losing everything to an execution.
How does a bankruptcy affect my credit?
There are several types of bankruptcy filings . Individuals usually require chapter 7 or chapter 13 They also affect the credit. Traditionally , bankruptcy has a detrimental effect on credit.
A Chapter 13 bankruptcy is a reorganization , not discharge all your debts . It is designed to allow time to negotiate with creditors on restructuring payment or possible payment terms of a more manageable form . Initially, a Chapter 13 bankruptcy will drop your credit score about 100 to 250 points.
A bankruptcy filing chapter 7 releases all your debts (excluding income taxes , child support, alimony, etc.). The disadvantage is that it can go down to 300 credit points and could take seven to 10 years to be removed from the credit report. You should always consult an attorney who specializes in bankruptcy ( ‘ bankruptcy’) before claiming any protection of the Bankruptcy Court .
In conclusion , obtaining and maintaining good credit requires financial counselling, discipline and a clear understanding of the type of loan and the time it will last your obligations to the creditor.
Best of all is that if you pay bills on time and control costs during all that time will heal bad credit into a good credit.