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Debt may be relatively inexpensive if you can find the appropriate offer. The atmosphere of low-interest rates “forced” mortgages and other types of loans to make interest rates much more compatible. However, banks also acted accordingly and made their policies stricter.
In the lending process, the focus is basically concentrated on the credit score of the applicant. The phenomenon of credit score is formulated based on a great amount of financial information related to the customer. Basically, the factors that mainly affect the score are stable income, “on time” payments of obligations, living at the same address for a long period, etc. Bear in mind, that most lenders base their decisions on the information provided by the credit reference agencies.
Collapse of Myth
A great amount of fiction has been created around the credit rating agencies. For instance, people tend to believe that credit rating agencies are those who accept or decline the application of their credits. Please not be deluded, the rating agencies are only aimed to provide information to the lenders, but not, in any case, approve or reject the applications of customers. Correspondingly, many people think that an applicant has only one score, based on which all lenders are making their decisions. Nevertheless, it is not true, as different lenders may be equipped with different credit scoring systems.
Breakdown of “Piggyback”
Piggyback is when someone with high credit score authoresses someone else to be a user of his/her credit cards. In this case, the authorized user gains benefits in the form of “credit points” generated due to the strong history of the authorizer. However, Fair Isaac Corp, creator of the well-known FICO scoring system generated a new scoring model under the name of FICO 08, that started to differentiate the legitimate users of accounts and the people that are connected for credit score betterment aims only.
Are you Registered to Vote?
Dear applicant, be aware that your name and address are reflected in your credit file, assembled by the credit rating organizations from voters roll. This is the main key point to identify the client and, basically, it aims to prevent funds from laundering and fraud. Thus, it also plays a role in your approval procedure. Other sorts of identity proofs also may be acceptable to the lenders, however, not all of them may be happy with alternative ones.
Start to Create Your Own Credit File
If you are an applicant with no credit or little credit information, based on which lenders should make the decision to provide loans or not, be a hundred percent confident, that lending may be really hard for you. One of the best choices is to take a “credit-builder card” with a duration of one or two years. The main disadvantage of a “credit-builder card” is regarded to a high interest rate, however, if you aim to build a credit history, you may pay off the balance amount each month and escape charges. By making payments on time, you can easily boost your credit score and become a reliable borrower.
Short-Term Obligations
Same-day loans are one of the common types of non-traditional lending, where the credit score or the absence of credit history may not play a role. A great amount of people suffers from low credit score, due to which they are not eligible to borrow funds from traditional lenders, such as banks or credit organizations. However, you may still be eligible for next-day loans. For checking the availability you can fill out a payday loan online application and find direct payday loan lenders.
Social Bump Up
Some well-known firms started to experiment with the phenomenon of “big data” for tracking the usage of the internet: especially information about online shopping and activities in social media. This experimental step may make a revolution in the world of the traditional scoring system and reveal the quality of creditworthiness of potential borrowers.
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