Getting a loan can be hard-and it's even more difficult if you have a credit rating of 500 or below. Traditional lenders rely heavily on credit ratings to paint an image of the potential borrower's creditworthiness. At The Associates Mortgage loan of Florida, we feel people are not only a credit rating. That's why we lend to people with a credit score of 500 or below-and folks who suffer from been through a personal bankruptcy or perhaps a foreclosure. This is what you need to know about borrowing with a bad credit score.
What Is a Credit rating?
A credit rating is a number that's allotted to an individual based on their credit rating and which supplies an idea of how risky it might be to give loan to that person. A higher score indicates a low risk (meaning that the person will probably repay it according to the relation to loan), whereas a lower score indicates a bad risk.
You might have heard of People's credit reports or of VantageScore 3.0. These are proprietary credit scores that lots of credit reporting agencies use to determine whether someone is “creditworthy.”
The exact formula for determining a credit rating is different for every agency, though we all know that it requires into account one's open credit lines, amount of debt, types of credit open (auto loans, credit cards, mortgages, etc.), on-time or late payments, debt to credit ratio, and negative events such as bankruptcy. Because credit agencies have their own methods for determining a credit rating, a person might have different credit scores at the different agencies.
There are a few things your credit rating doesn't include. For example, your credit rating is unseen your employment history or your salary. A lender may charge a fee these details, however, it isn't automatically included in your score. This is important to notice since it might have an impact on which loans you might be eligible for and assist you to reveal that you will find the way to repay a loan.
Borrowing Money with a Credit Score of 500 or Below
Both VantageScore and Fico view a score over 700 as good, whereas scores below 500 are noticed as very poor. That means that those who fall into that “below 500” category have a harder time securing credit, regardless of what it's for. Most traditional lenders won't lend to individuals who they envisage to have poor or bad credit. Thankfully, some lenders recognize that individuals are more than just a credit score and provide poor credit loans to individuals who have poor credit.
While you are able to take steps to rebuild your credit, raising your credit score takes time. Additionally, some “derogatory” marks in your credit like bankruptcy and foreclosure will remain on your report for a long time. If you're in need of a new-to-you set of wheels or want to consolidate your debt, you might not have the ability to wait before you apply for a loan. In the end encourage visitors to work on raising their credit score, we're pleased to discuss which loans are for sale to you based on your credit score and situation while you work on enhancing your score.
Bad Credit Loans
There will vary types of bad credit loans based on your needs and financial situation. For instance, if you're looking to get a mortgage, you might be entitled to an FHA loan with a credit rating of 500 and a 10% deposit. We work with our clients to determine which options may be perfect for them, including subprime loans and hard money loans.
At The Associates Home Loan of Florida, we support Floridians. We understand that life happens and we're here to help you move ahead and work towards that future you imagined. To learn about what credit options may be available to you-whether you've got a credit score of 500 or below or not-give us a call or apply now.