When you apply for a mortgage or credit card, the likelihood is you will receive some form of pre approval scoring. This is often referred to as pre approval scoring and it is not actually part of the lender’s approval process. It is just an automated system that helps lenders determine if you are credit worthy and whether you can repay the loan or not.
The premise of pre approval scoring is quite simple. It relies on your credit score to predict how much money you can realistically borrow. The score is based on several factors including your payment history, outstanding loans and any current debts. Many people assume they can skip this step entirely and hope that their credit score will allow them to qualify for the loan. That is simply not true.
Lenders use your credit score as a means of evaluating your risk. If you have a low score, then it is more likely that you will default on the loan or charge off the account. It is not uncommon for someone with a high FICO score to be declined for a mortgage or line of credit. The fact is that there is some risk involved in providing financial services to everyone.
In fact, if you apply for an unsecured loan without the proper forms, such as income and employment documentation, your application will almost certainly be denied. However, if you fill out the appropriate forms with the proper documentation, your pre approval scoring will reflect that you are a responsible borrower. Most lenders want to see that you have managed your money and do not go into debt for credit reasons. For that reason, it is essential to make sure your FICO and other credit scores are accurate. Pre approval scoring is a way for lenders to determine that they are not putting their money at risk by approving your loan.
If you find yourself being denied for a mortgage or line of credit, your next move is to request that the approval rating is removed from your credit report. This can often be done by contacting each individual lender that has rejected you and informing them of your intent to have the information removed. In addition, you should contact the three credit reporting agencies to inform them of the information’s removal. Usually, the agencies are given 30 days to respond. If they are unable to do so, you may be able to have the items deleted from your report after that period of time has passed.
The most important thing about pre approval scoring is that it can keep you from making impulse purchases. Many consumers make poor financial decisions when they are trying to purchase a home or car. Before you make such a large purchase, you should check to see what your credit score is. If you find that it is too low, it may be in your best interest to wait and make only a few major purchases before you reestablish your score. By taking the time to establish a healthy score, you can avoid having to repeatedly be denied loans because of poor credit history.
Once you have obtained your credit report, you should then look for mistakes. Mistakes on credit reports occur more frequently than most people think. Even if the mistake is an insignificant one, it could have a negative impact on your overall score. For this reason, you should look for errors on personal information (such as your social security number), employment history, and other details related to your credit report.
While pre approval scoring certainly provides an advantage for consumers with good credit, it also presents some risks as well. When using the system, it is important that consumers understand what type of score they are looking at. It is impossible to know exactly what lenders will be looking for unless you examine your own scores. In addition, some lenders mistakenly report incorrect data to the credit reporting agencies. Because of this possibility, it is extremely important for consumers to make sure that all of the information provided by the credit bureau is completely accurate.