Bad Credit Mortgage Denver

Credit Scores

Credit scores have been around for several years now. I remember when we didn’t have them. The credit scores gives a summary of your ability to get credit and pay back that credit over a period of time. There are three major reporting agencies that most companies use. These agencies are Equifax, Trans Union, and Experian. Each one of these agencies will create a score for every individual once a credit trade line has been created. Creditors are not required to report and it costs the financial services companies to report to the credit bureau. There are some companies that report to only one or even two of the agencies. When beginning the process of establishing or rebuilding your credit it is important that you pick a credit company that reports to all three credit agencies.

Everyone starts out with not having a credit score. The first credit card you open will give you a score in 3-7 months. Typically this score will be 620-640. The score will depend on how much you can borrow and how much you owe against the card. This is called the balanced owed to high credit ratio. As we go through life we get more credit and we may have a bump in the road causing us to be late on something. Depending on how many accounts or trade lines you have open will determine how much this will affect you personally. If you have not had credit for more than 5 years then the late payments will affect your score more than a person who has had credit for 10 years. Please remember it is easier to have a negative mark placed on your credit than it is to have it removed. I will say it over and over again, time will heal the wounds.

There are a couple of different types of credit available to you. There is installment credit, revolving credit, interest only, and a negatively amortized loan. Installment credit is a loan that starts out at a certain balance and interest rate that you pay specific payment amounts on for a fixed period of time. These types of loans can be secured by real property or personal property or they can be unsecured. An example would be a 36 month or 3 year loan with a payment of $100.00 per month. You will make this payment until the loan is paid in full. Revolving credit will have a maximum you can borrow with a minimum payment than can change monthly. The minimum payment will typically never pay off the loan. An interest only loan or payment means that you only pay interest every month and the principal balance never decreases. A negative amoritization means that you don’t pay enough monthly to cover the interest so the balance of the loan increases every month.

Example: If you have 10 trade lines and you owe 50% of the credit limit:

Bad Credit Loans Colorado

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