SAN DIEGO (PRWEB) December 17, 2008
FirstAgain, an online consumer lender focusing on individuals with excellent credit, is shedding light on how consumers can build their creditworthiness – which is essential today as financial institutions continue to tighten lending standards considerably.
As an online lender of unsecured personal loans, FirstAgain has seen its share of credit applications—and has funded thousands of loans for superprime borrowers with excellent and substantial credit. The company has always understood the importance of looking at a person's entire credit history, including an applicant's assets and income as well as the ability to repay debt obligations. In today's credit-crunch world, more and more lenders can be expected to look beyond a person's credit bureau report to assess creditworthiness. In taking these steps, prospective borrowers can present themselves to potential lenders in a more positive light. HOW:
FirstAgain has a deep history in consumer lending that has helped the company forge a profile detailing the key characteristics shared by the most creditworthy borrowers. Instead of relying on software-analyzed payment histories and FICO scores blemished with inaccurate credit information, FirstAgain applies a "back to basics" judgmental underwriting process, which examines each person's complete credit history to determine if they have the Characteristics of Excellent Credit. Individuals who meet these guidelines typically adhere to the following top 10 tips.
1) Build a history – Rome wasn't built in day, and neither is excellent credit. The days of building creditworthiness simply by signing up for a few credit cards and making a few months of on-time payments are over. Excellent credit in today's world of restricted lending takes time to build. Generally speaking, lenders like to see at least five years of significant credit history. 2) Be creditworthy – Pay more than your minimum amount, and do it on time. Use the tools creditors provide to help keep your timely payment promise, such as automatic payments and/or online payment reminders. 3) Demonstrate that you can save – Showing you're a worthy borrower means showing you're a capable saver. That means maintaining a well-balanced financial portfolio featuring a combination of liquid assets (i.e., bank deposits, stocks, and bonds), retirement savings and cash down payments of real estate.
4) Show a diverse mix of credit accounts – A history of paying only credit cards is not as strong as showing you have met a variety of loan obligations. Installment debt (e.g., vehicle loans) and mortgage debt are two examples. 5) Stay well below your total credit limit – Typical advice used to be to keep 15-to-20 percent of your total available credit reserved for emergency charges. Today, creditors like to see borrowers reserve more than 70 percent of their total available credit. 6) Minimize your credit card debt – Try to pay off your credit cards every month and don't use credit cards for longer-term/large purchases. Creditors don't like to see high balances on revolving credit accounts. Excellent-credit borrowers typically have little, if any, revolving credit debt. Use installment debt for larger purchases that need to be financed. 7) Manage spending judiciously – Be conservative in your spending habits and avoid exceeding credit limits. Not only are there fees involved, but it doesn't send a good message about your ability to manage spending. 8) Maintain stable and sufficient income – It should go without saying that the days of getting a loan with insufficient income are over. Borrowers need to demonstrate they have ample income to repay debt obligations before taking on any additional loans. 9) Keep your debt-to-equity ratio in line – Debt-to-income ratios provide lenders with an overview of an individual's financial picture. You can estimate your ratio by using a debt-to-income calculator. Each lender determines what a desirable ratio is a little differently, but if you are saving money each month, your ratio is probably OK. 10) Check your credit report – Studies have shown that most credit reports contain inaccuracies, some of them serious enough to hurt your ability to borrow. At least once a year, obtain a copy of your credit report (http://www.annualcreditreport.com) and clean up any old or incorrect information.