Knowing that you have a good credit score is comforting and uplifting. However, if you have plans to boost your credit to apply for a car loan or a new home mortgage loan , you will understandably want to know , before you do proceed with your application, if your score is good enough for your application to be approved and whether the decision to buy that new house is a right one.
The MyFico site has several mortgage calculators that can help you assess the following:
how much you can borrow given your income, how much you are likely to pay in monthly payments depending on your credit score,
compare rates between lenders , determine if consolidating your credit cards is a good decision to make, find out which is better – renting or buying your house, and determine whether you would be able to save if you refinance your loan.
For example, you can key in your monthly income and expenses, the loan terms you want (interest rate, term, and downpayment), as well as expected tax and insurance expenses. The results table will show you conservative and aggressive estimates as to how much you can qualify for with different downpayment scenarios, and the amount in monthly payments you would be paying.
If you're thinking of refinancing a current loan, you can key in the information about your current loan, the term and costs of the new loan, the value of your property and tax and insurance amounts, and see how much you can save if you refinance.
Note, however, that the credit score is not the only consideration lenders use to decide whether or not they should give your more credit. They will review your debt to income ratio, meaning the amount of debt you would be able to handle given your current income and existing expenses. They will also look at your employment history as well as your credit history. If you have a good credit score but your employment history shows that you keep changing jobs, this may affect your chances of getting your loan application approved. A high debt to income ratio would indicate that you are currently using much of your income to pay debts and would have a chance of defaulting on a new loan payment. If you are habitually late in your credit payments, the lender would have second thoughts about granting you a new loan.
Comments
John March 25, 2009 08:22:11 PM 8:22 PM There are so many factors which lenders take into consideration before lending loan and credit history is one among them. But Whatever we do has its effects directly or indirectly on our credit history.
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