CREDIT (How well you pay your bills)

How long you have had credit, how well you have been paying on your loans, how many debts you have, and how close to or over the limits you are on your credit cards.

All companies look at your credit scores- these scores are the result of your buying and payment habits.

People tend to refer to credit scores as FICO scores  (named after the company that first created the consumer profile model).  Your credit score is a three-digit number between 300 and 850.

There are three major credit companies that gather credit information of everyone that has used a credit card, purchased a car, or bought a home: Trans Union (New Empirica), Beacon (Equifax), and Experion (Fair Isaac Model). These companies work from models that predict how well a borrower will pay based on a total credit history of that borrower.

The better your credit - the better your scores; the better your scores -the lower your rate and the greater your choices. The lower your score the higher your rate.

CAPACITY (INCOME and overall BUDGET)

Loans are structured in two ways – showing how much you make or simply using what is called "stated income" (You state what you make, and it is not questioned or verified). Stated income is easier to use with good credit. The stated income choice is obviously easier to qualify for.

Your capacity:

What you make versus what you must spend to pay your bills - commonly referred to as your ratio. Paying off your bills (consolidating your debt) is the easiest way to cut your payments and im-prove your budget (ratio). The number of bills you have, how close to or over the credit limit you are, and your payment habits all determines your FICO.

COLLATERAL (AVAILABLE EQUITY )

The value of your home minus what you owe on it. Lenders look at the LTV percentage (Loan-to-Value: what you owe divided by the value) more than the actual dollar equity.

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