evaluate credit risk, the likelihood that a borrower will make payments
on time and pay off the loan. Some lenders have very strict guidelines
and evaluate borrowers "by the book". At Full Spectrum Lending,
we're dedicated to getting the whole story so we can work with you
to find a loan solution that's right for you.
To judge credit risk, lenders typically look
Income: Regular and documentable income
from earnings, commissions, investments, rental payments and other
sources. Lenders look for a steady income from month to month and
a stable work history.
Assets: Savings, investments, retirement
funds, cars and other valuables that are "liquid" or easily
converted into cash.
Liabilities: Debts such as mortgage loans,
home equity loans, credit card balances, car loans, student loans
and other consumer debt.
Other Financial Information: Situations
that could affect payments, such as lawsuits, collection activity,
recent bankruptcy or property foreclosure, obligation to pay alimony
or child support, or being a co-signer on another loan.
Payment History: Making timely mortgage
or rent payments is very important. Paying late just once by 30
days or more can affect both the loan and the interest rate offered
you. Late payments on credit cards, car payments and other bills
are also factors.
Credit Reports: National credit bureaus
collect information and provide reports to home lenders and other
creditors. Credit reports include details on credit accounts and
information on your payment history.
Debt-to-Income: Monthly debt expenses
and income get converted to a debt-to-income ratio. While there
isn't a standard, lenders often have a maximum number that they
will allow a borrower to have.