Funeral Home Financing FAQs – Credit Score
Is my credit score very important when a bank determines my loan?
YES, your credit score is very important in today’s tough credit market. Banks will use your credit score as a handy way to assess how much risk is involved in making a loan to a potential borrower. The higher the likely borrower’s score, the less risk that lender faces. A higher score will also determine your probability of getting the available rate and term. What we have seen is that most banks will reject a loan based solely on the credit history of that potential borrower.
An average score that lenders will consider favorable is 680 or higher. Every bank is different, however, some may work with a FICO score of 630 while others require 680 or higher. According to our research, the average US range is 651-720 in follow-up during these turbulent credit times.
Your credit score will also be wiped from time to time because your payment history determines your credit score. If you have difficulty making your payments before the due dates, this will affect your credit rating and lower your score. For example: someone with an average score of 700 or higher can increase their score by as much as 20-25 points by paying their bills on time in a given month. Establishing or re-establishing a good payment history will help strengthen your score.
Another item that can lower your score is having high debts and stretching your credit cards to their maximum limits. This can lower your credit score by as much as 70 to 80 points.
While it’s better to have a credit card account than not, you need to make payments on time to increase your credit score. Someone who doesn’t own a credit card, for example, tends to be at higher risk than someone who manages their credit cards responsibly from month to month.
One thing to remember before applying for a large business loan is to obtain your own credit report. By getting your own credit report, you can review and verify the items we’ve just covered in this short segment.
Remember: in today’s market, your credit score is king!
