The Credit Report is a wondrous and potentially dangerous document. The bank or financial institution will run a credit report on every new request for a loan. They will do this for two reasons, one – they will want to screen out (turn down) any unwanted loan applications, and two – they will want to know if you have an adequate credit score that the banker and his bank can live with. When I say banker I mean the individual banker, who represents the Loan Committee of the bank, the bank Board of Directors, and the Regulators of the bank in that order.
A good credit score is a moving target in the long term but you can say that if you have a score of over 700 then you have a good credit score. An adequate credit score before 2008 was a score of 630 or more. This has changed since the Great Credit Meltdown of 2008/2009 and now we are looking at a score of 680 or above to be adequate. Smaller banks usually look at the total picture when incorporating the credit score into the decision to make, or not to make, a loan. The large banks may use a minimum and not make any loans if the borrower has a credit score below a certain level.
Information on the credit report is individual in nature and is listed for you alone unless you own accounts with another individual and then you will be impacted by the joint payment record. I have seen people with good credit payments and not so good credit scores, and conversely I have seen people with bad credit payment and a pretty good score. The score is a proprietary number that take in consideration a large number of factors in order to come up with a final score. One item that people forget about is whether they have used most of their credit because this can adversely impact their credit. The credit reporting agency likes them to have room in their accounts and not to be fully drawn on their credit accounts.
The banker looks at NO CREDIT SCORE OR NO CREDIT REPORTING as being worse than no credit at all. This seems ridicules but they feel that if the person has had no credit in the past, then they do not know if they will pay their bills or not.
The banker can forgive certain Accounts with a bad credit record. They banker has in the past looked past items of health debt that had a bad record of payment because health is beyond control of the borrower and the insurance companies usually do not pay on a timely basis. Another item that banker have overlooked is Cell Phone Bills, because the cell phone companies have been notorious for not telling the borrower all of the details of a plan that can come back to haunt the borrower.
RUN YOUR OWN CREDIT AND PAY FOR THE SCORE. this is a absolute necessity because you need to know what your score is and you need to know what is on your credit report. You may find information that is inadequate or information that can be explained to the banker and subsequently overlooked by the bank. A banker will look more favorably on a borrower who can explain a bad payment than a borrower who has the Deer in the Headlights Look, when asked about the item on his credit report.
Please Email me if you have any questions on Loan Applications or Questions on any loan related item at roger@schlueterfinancial.com or at my website at www.schlueterfinancial.com