Credit Repair

How does a creditor decide if you’re “creditworthy?”

By knowing how a creditor will evaluate you, not only is the mystery removed from the process, but more importantly you can take affirmative steps toward improving your “credit profile” and increasing your chances of getting your credit approved.

When you apply for credit by filling out an application, normally the application provides the creditor with permission to retrieve your credit report from a credit bureau. Once your credit report is retrieved, the creditor assesses your credit worthiness based on both objective and subjective criteria.

Many lending institutions will employ a short-term debt-to-income ratio where they calculate your present short-term debt payments (i.e., excluding long-term debt such as a mortgage) and divide it by your total annual income. Generally, creditors will not lend to you if your short-term debt is more than 20 percent of your annual income.

Similarly, a potential creditor will add up all your monthly bills not including rent/mortgage and utilities and divide by your gross income (before taxes). When using this analysis, creditors are looking for a ratio of under 35%. By consolidating your debt you can usually lower the amount of your monthly payment (even though your debt doesn’t change).

This way you can decrease your ratio and increase your chances of procuring credit.

Speak with a professional mortgage broker now and get free advice that could help you find the best mortgage!  Call 1-800-662-7757 or Click on the link below:

Click here to receive up to 5 Quotes on a home purchase loan, home refinance loan, home equity loan or a debt consolidation loan.