Sunday, November 14, 2010
Denied a Loan? Look to Your Credit and Income
A lender approves your loan based on the amount of risk you pose. Your credit score is able to depict the amount of risk in a measurable number--the higher the score, the less risk you pose. However, another component is how much money you have (assets) and how much money you make (income).
For example, if you have a high credit score (750 plus), but you only make $10 an hour part time and have $1000 in the bank, it's less than likely you'll be able to finance a car that costs more than $20,000. To qualify, you'll need to put more money down or just end up getting a cheaper car. The same concept holds true for home loans / mortgages.
Ultimately, it comes down to what you can afford AND your credit history.