PICKING THE RIGHT LENDER
As a buyer, the most important thing you can do when shopping for a loan is to pick the right lender. Depending on your individual situation, it's important to be matched with the correct type of lender.
If you're a person with good credit, a stable income, and low debt, then you will want to find a lender who specializes in what is called "A" paper loans. By getting an "A" paper loan, you will usually get a better rate on your loan and potential lower fees.
If you have a bankruptcy, late bill payments, and high debt, than you would want to go with a "C" or "D" paper lender who specialize in harder to categorize loans.
There are lenders who do the in-between clients, referred as "B" lenders. You may just have to close some accounts or pay a little debt off, to jump in to the next category.
Who decides what category you are in? Well there are a number of factors involved and a lot of it is based off of your credit history. A lender will run your credit report and a score will be generated from it. This score is called a FICO score. What effects your FICO score? Below are some of the major factors to keeping a desirable high score.
- Keep your payments on time. Being late on bills can lower your FICO.
- Keep your debt down. Don't go out and buy a new car (or other large purchase) right before you're ready to purchase a home.
- Try to avoid having a foreclosure or repossession on your credit.
- Don't get too much credit. Even if you don't use all of your cards, lenders look at your credit potential. It usually looks bad to have a lot of open accounts that you could "potentially"charge up.
