Your creditworthiness is the first thing lenders review to predict your repayment reliability when you apply for a commercial mortgage loan. But do you know exactly what lenders look for? Or what you can do to keep your commercial mortgage credit score high?
Have questions regarding your credit score and its effect on your commercial loan finance request? You’re not alone. Read on to get a crash course on credit as it relates to your ability to get the loan you need.
A: Your credit report shows your entire credit history, which helps lenders decide if you’re a good prospect for a loan. Your credit score, based on your credit report, is a numerical evaluation of you as a potential borrower. The higher your score, the more likely you are to repay loans on time. With a high credit score, you get better rates and terms.
A: Reports are compiled by three different national credit bureaus: Equifax, Experian, and TransUnion. The most widely used credit score is the FICO score, developed by Fair Isaac Corporation. A Tri-Merge report, which includes scores from all three credit bureaus, also includes your FICO.
A: You’re entitled to a free credit report from each of the three credit bureaus once per year. You can also purchase a credit report from a number of sources online.
A: Everything about your credit history, good and bad, is in your credit report. It lists all of the credit accounts you’ve had – credit cards, loans, mortgages – and the payment histories for those accounts. Any tax liens, bankruptcies, foreclosures, or accounts turned over for collection are included. The report also lists inquiries made by potential lenders/creditors.
A: There are four main reasons:
A: Since credit scoring is not a perfect science, it is best to work with a lender who will consider other risk factors. These may include:
A: Lenders typically take the middle of the three scores, or the lower of two if a third score is unavailable.
A: No. You can order your credit report so you know generally what your score is, but your lender will obtain your score directly when evaluating your application. This is especially true if the lender wants an industry-specific score, since those are not available to you.
A: The following factors have a significant effect on your credit score:
A: Frequent inquiries can decrease your score since it indicates that you’re looking for credit. However, you can reduce the likelihood of having your score decreased if you do all of your shopping over a short period of time, such as 14 days.
A: Anything from being late on a payment to having too much credit – even if you always pay on time – can hurt your credit scores. Keep these five pointers in mind to help make you more desirable to lenders:
Ready to get an idea of the kind of commercial loan you could secure with your credit score? Visit the Commercial Direct Loan Customizer and tell us about your finance request.
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