Bad Credit Home Equity Line of Credit
Bad Credit Home Equity Line of Credit
Bad credit can increase the difficulties homeowners face when seeking home mortgage loan facilities. Bad credit can be the reason for a bad credit score.
What is a credit score? Credit scores vary between scores between 300 and 850. Credit scores are created by Fair Isaac Corporation. Lenders who set up home equity lines of credit use credit scores to determine the interest rate charged to homeowners.
Homeowners with low credit scores have to pay higher interest rates. A score above 700 is a guarantee of good interest rates. The credit score also serves as an indicator of whether the lender should accept the homeowner's credit request. Homeowners' credit limit decisions are also based on the homeowner's credit score.
The credit score is a function of the homeowner's past credit limit. In the United States, three different
agencies record each consumer's line of credit. The agencies are Experian, TransUnion and Equifax. If a homeowner with a low credit score wants to improve that score, the homeowner should contact each of these three agencies.
Attempts to address a poor credit record and improve credit scores require disapproving of false claims that money is being borrowed. If the homeowner can prove that the monetary claim is false, the homeowner has the opportunity to increase his credit score. This action should be taken if the homeowner's score for the homeowner loan facility is less than 640. Such a score is a sign of bad credit.
The credit score battle is not like a shot in the dark. A survey of US credit reports shows that 80% of the reports contain errors. Therefore, the homeowner may have good reason to question the credit score used to determine the interest rate of a home mortgage loan facility.
The apartment owners' credit scores are based on the three credit scores of the people with the highest incomes. This is a score that homeowners must correct. Such correction may require a written statement to each of the above agencies. These agents will then contact the homeowner and indicate if more information is needed. If the homeowner is lucky, the credit score will rise and the interest rate on the desired home mortgage loan will fall.
Once the homeowner gets a good credit score, he or she will want to avoid slipping back into areas with bad credit. This means that homeowners should avoid spending that will take them to their credit limit.