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Your Credit Rating : What is
it and Why is it important? |
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Your credit rating: what is it and why is it important?
Before you think about taking out a loan, you need to get
familiar with your credit rating. The amount you will have
to pay every month on your loan, and even whether you can
get a loan at all, depend on whether or not you have good
credit.
Your credit rating is a measure lenders use to rate how big
a risk they are taking by lending money to you. Borrowers
with good credit ratings can get loans with lower interest
rates and lower payments. People with credit ratings that
aren't so strong may have a higher interest rate.
What goes into your credit rating?
1. Your credit history Have you repaid past loans
on time? Have you ever declared bankruptcy? Issues like
these are a big factor in your credit rating. To get an idea
of your credit history, order copies of your credit report
from the three national credit bureaus
Experian (800-997-2493),
Equifax (888-397-3742)
and Trans Union
(800-888-4213).
2. Your employment history Do you change jobs
often, or have you had the same job for awhile? Lenders
consider people who stay in their jobs for a long time to be
less risky borrowers.
3. Your current debt If your debt is already high
compared to your income, creditors might consider it risky
to lend you even more.
4. Your collateral If the equity you have in your
home is much larger than the loan you want, then lending to
you isnt very risky.
5. Your cash on-hand
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