Your Personal Credit Report is more than a reflection of your financial standing.
It is a reflection of Your Financial Reputation.
It is also a reflection of your personal Character and of the level of Trust a Lender can assess.
A Solid Personal Character and a High Level of Trust are two very important values in all of our lives, especially in the financial arena.
Think of it… if you have a bad credit report, it is most likely because you have experienced late payments, default payments, charge-offs, delinquencies, judgments, and many other such negative marks on your credit report.
In simple terms, a bad credit report means that you have a bad reputation for not paying your bills, at least, this is how a creditor may interpret a bad credit report.
Regardless of the reason or reasons as to why you have fallen behind on paying your bills is mostly irrelevant to the lender (creditor).
The responsibility of a loan officer is to determine the probability that a borrower will repay a loan, and having a bad credit report is not a good start.
Think of it this way, if someone approached you, someone you did not know, and they asked you for a personal money loan or a financial business loan, and then, after you took a look at their personal credit report, you see that they have bad credit, you see a number of late payments and a few charge offs, would you extend them the loan?
If you were financially smart, and I know you are, I would bet that you would not move forward with extending this person the money they need, because the chances of this person paying you back the loan, according to the credit report, or rather, their financial reputation, would be slim to none.
In other words, lending this particular person any sum of money would be a very high risk, based on their credit report (ie: financial reputation).
These are the kinds of decisions that loan officers make every day, and loan officers rely, either partly or solely, on credit reports, to make these decisions of whether to approve or deny all sorts of loan applications.
Of course, loan officers make lending decisions based on many factors, but rest assured, that getting past the first step depends heavily on what is included on your personal credit report.
Now, not all bad credit is evaluated in the same way, as every lender has their own loan approval policies.
There are instances where your personal bad credit report may be deemed to be ‘not all that bad’ based on a particular lenders loan criteria.
However, TAKE CAUTION!
Even though your loan application may have been ‘approved’, in spite of your bad credit report, you might choke on the terms of the loan.
Loan approvals for applicants with bad credit reports and low credit scores usually come with enormous interest rates, heavy late payment penalties, a large balloon payment at the end of a short term loan, collateral requirements, and a few other undesirable loan conditions.
In my experience, there are too many people that do not care all that much about what their personal credit report says about them, that is of course, until they need to buy or rent a home, or lease an apartment, or buy a car, or fund an unexpected emergency.
There are a few other situations where your credit report may become a factor, such as, when you need to buy auto insurance, rent a car, need a hotel room, get offered a job that pays in excess of $75,000.00 per year, apply for a government job, or pass a background check.
Your good credit report is the golden key that could unlock so many good financial opportunities that have the potential to add tremendous financial value to your personal life, this is why I believe that everyone should do all that they can to build a solid credit report that represents them in the best possible way.
The credit repair process takes time, and you would be well served to have the best credit report possible at all times, because you never really know the actual time-and-date when a great opportunity will present itself, and you want to make sure that you are in the best possible credit position to take advantage of the best financial opportunities that do come your way.
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