Your credit history is a major factor that comes into play when you’re applying for a personal loan. The lender will check your credit history to determine whether you qualify for the loan and the terms you qualify for. Companies like Rescue One Financial of Irvine, California help you to repair your credit and get the financial help that you need.
What Credit Do You Need?
In general, the better your credit history, the higher loan amount you will qualify for. Better credit also means you can qualify for a lower interest rate and borrow money at a lower cost. On the other hand, if you don’t have a great credit history you may not be able to qualify for a large loan amount. If you do qualify with a less than perfect credit score, you may have to pay the highest interest rate.
What Parts of Your Credit Will the Lender Check?
When the lender qualifies you for a loan, they may check your credit report or your credit score or both. Your credit report contains a history of your credit accounts along with details about your payment history and the balance on those accounts.
Your credit score, which is a numerical summary of the information in your credit report, allows the lender to make an instant, but unbiased conclusion about your credit history. The higher your credit score, the better you’ve handled credit in the past and the more likely it is that you’ll qualify for a loan with the best terms.
Checking Your Own Credit Before Applying
You can check your credit for free before you apply for a personal loan. First, you can get free copies of your credit report through annualcreditreport.com. Check your credit reports with all three of the major credit bureaus: Experian, Equifax, and TransUnion. The lender may check one or all three of these credit reports. Make sure that all three credit reports contain accurate and complete information before applying for the loan.
If you find errors on your credit report, you can submit a credit report dispute to have the errors removed from your credit report. Do this a few days or weeks before you apply for the loan to give the credit bureau a chance to investigate your dispute and clear up the errors on your credit report.
Your credit score is not included with your annual credit report, but you can check your credit score through a free credit scoring service like Credit Karma or Credit Sesame. Your credit score will give you a better idea of your credit standing and help you predict whether you will be approved for a loan and at what interest rate.
While viewing your credit score will help you better understand your credit standing, keep in mind that the lender will also consider your income, level of debt, and likelihood of repaying to determine whether to approve your loan. Having a good idea of your credit standing can help you know whether you’ll be approved.
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