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04/12/2016 5:41 am
Credit Score Is Important To Get Mortgages For Contractors
Many people often complain of not being eligible to get a loan at the time of need. Though there are several financial institutions, which offer money lending services to different people, it does not mean, you can borrow money from any of them at any point of time. Getting a loan sanctioned is not very simple and you need to prove yourself as a good borrower. Apart from verifying your identity and source of income, the financial institutions also need to cross-check your ability to repay the money you have borrowed. While there are several aspects that qualify you as a good borrower, it is your credit score, which is considered to have the utmost importance.
What is credit score?
Credit score refers to the three digit number, which is calculated after collecting all your credit records. This number or score plays a great role in helping the banks or non-banking financial institutions to determine the eligibility or the creditworthiness of the loan applicant. Most of the banks offer credit card, loans or mortgages to people after assessing their credit scores thoroughly. The score not just helps in determining the rate of interest and the amount to be sanctioned. It also plays a great role in getting the loan application sanctioned, as people with poor creditworthiness are not offered any type of loan.
How to improve credit score?
Many of you may not have any knowledge of credit score and do not know how to keep it high. If you are one of those people, who do not know how to get a rich credit score, you need to follow some simple tips. Pay all your bills on time as defaulters have lower creditworthiness. In case you are using a credit card, spend only as much as you actually need. Do not spend in excess. Also pay the bill of your credit card on time. If you do not pay your debts on time, you might lose your eligibility to get mortgages 4.contractors.
Why a good credit score is important for independent workers?
Having a high credit score is important for one and all. However, it is more important for mortgage contractors, who are seeking loan, as they have fewer documents to prove themselves as worthy borrowers. An independent contractor often cannot offer all the documents proving his source of income. Even if he provides the evidences stating his valid income, it does not guarantee his stability of earning, as most of them are hired on no work, no pay basis. If he has a good creditworthiness and has documents to prove himself as a good repayer, he might be able to ease the process of loan sanction.
Independent contractor like the permanent employees of any company have several reasons to take loan. However, the procedure for them is a bit tough as their jobs are quite unstable and the lenders cannot just stake their money unnecessarily. Therefore, before applying for a loan, you should make sure that you can fulfill the lending parameters of the bank.
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