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Your Personal Credit RatingFor purchasing investment property, your personal credit rating can be all the difference between success or failure with getting financed for a mortgage loan.
Your credit rating is really nothing more than your "financial report card" that lenders use to evaluate your ability to pay back the loan as agreed. It provides the information necessary to measure your risk as a borrower. In this manner, your credit rating can greatly influence your financial future indeed.
Credit ratings are determined by your bill and loan payment histories along with your current assets and liabilities. A low credit rating indicates a high risk of defaulting on a loan, and this will either result in a lender's refusal to make a loan, or charge high interest rates for accepting the high risk.
In the United States, your credit history is ranked and maintained by the three main credit bureaus (Equifax, TransUnion, and Experian). Also in the United States, your credit worthiness is determined using the common 3-digit FICO credit score. The term FICO comes from Fair Isaac Corporation, which developed the credit rating concept in the late 1950s.
Credit scores can range from a low of 350 to a maximum of 850. An individual's credit score, along with their credit report, will affect their ability to borrow money from financial institutions such as banks and credit unions.
The main factors that may influence your credit rating are:
So, the credit bureaus have all of your credit information on file that can be retrieved and evaluated by lenders whenever you apply for credit and loans. A good rating will definitely be your ally when applying for mortgage financing to purchase a rental property.
For more in-depth information about your personal credit rating, please visit The Landlord's Library book collection. It's the ultimate, one-stop source for practical, comprehensive information on the entire subject of residential landlording.
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