Poor credit home equity line of credit

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Poor credit home equity line of credit

25th January 2010

Poor credit history may increase the difficulty that homeowners are facing when trying to find a home equity line of credit. Poor credit can be the cause of low credit score.

What does credit score mean exactly? Credit value ranges between 300 and 850. Lenders who arranges for a home equity line of credit utilise credit scores to determine interest rates that homeowners will be charged.

Homeowners with low credit scores have to pay higher interest payments. A figure above 700 should yield good interest rates. Credit score also is a measure of whether a creditor should take on homeowners in a credit application. Decisions on credit limits for homeowners are also based on the homeowners' credit score.

Credit score depends on the homeowner's credit history. In the United Kingdom, three different agencies keep a record of each consumer credit line. These agencies are Experian, TransUnion and Equifax. If homeowners with a low credit score want to raise their rating, then they should contact each of these three agencies.

In order to overcome a poor credit record and for credit rate to increase, it is necessary to challenge the false claims of money owed. If the homeowner can prove that the claim for money is false then the homeowner has an opportunity to improve their credit score. This action must be taken if the homeowner who plans to seek home equity line of credit has a score of less than 640. Such an indicator would be a sign of poor credit.

Contesting a credit scores is not necessarily a shot in the dark. A review of credit reports in the United Kingdom showed that 80% of the reports contained errors. Thus, homeowners may have good reason to doubt their credit score which is used to determine the interest rate on a home equity line of credit.

A credit score for a couple, who are joint owners of credit based on three scores from the person with the largest income. This is the score that homeowners should try to make correct. Such amendments may require a written statement to each of the above-mentioned agencies. These institutions will then contact the homeowners, and indicate if they require more information. If they are fortunate, their credit score will be increased, and the interest rate on the desired home equity line of credit will be reduced.

Once the homeowner has a good credit score, he wants to avoid slipping back into the area of poor credit. This means that homeowners should avoid those kinds of expenses incurred by them to the borders of their credit limits.


Posted in Personal loans

 
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