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Loan Eligibility

May 27, 2008  |  Difficulty: Easy

Path to mortage
Each lender has its own guidelines about what is acceptable and unacceptable for that particular company. These guidelines will determine if you are given a loan. With that said, mortgage lenders are permitted to take a full look at your credit report before lending to you.

The guidelines that determine your loan eligibility are generally called underwriting guidelines. Basically, the lender is evaluating your risk as a borrower and if there is a good chance that you might retract from your loan agreement.

This means that if you have a low credit score, you will need to find a lender who has underwriting guidelines that will accept this. But keep in mind, lenders who accept individuals with rocky credit, usually charge greater fees and interest rates. All in all, if you have poor credit, you will shell out more cash.

But the bad news doesn’t last forever. If you establish a timely mortgage payment schedule, your credit score will increase. And when it is time to renew your mortgage, your credit score will be much better, and then you can then request a lower interest rate!

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