How Will the Three Major Credit Reference Agencies Affect Your Credit Score?
Credit checks are always applied when you apply for any loan, especially if it is to purchase a vehicle. This is because you will need to have a good credit score to be approved by lenders. Lenders are looking at your credit score and whether or not you can repay the loan as agreed upon before they make you an offer. However, some lenders use a different set of criteria to approve loans for individuals with bad credit.
Lenders use a different set of credit checks for these loans
They do not look at your credit score or where you live. Instead, they look at whether or not you have filed for bankruptcy within the past seven years. This is because they want to be sure that you are responsible and able to pay off the loan in full. If you have filed for bankruptcy within the past seven years, most lenders will disqualify you from any kind of credit check for car loan applications. This includes both secured and unsecured forms of car loan applications.
You may be wondering why lenders
make hard credit checks on individuals with low credit scores. There are a couple of reasons why they do this. First, they are trying to gauge your commitment to paying off the loan as well as how committed you are to keeping your vehicle. If you had no prior bankruptcies, no traffic violations, and good payment history with your current credit cards and loan payments, you may not be considered a high-risk applicant by lenders.
The second reason why some lenders
do not use credit checks for applicants is because they do not want to lose business. Most lenders would lose money if they denied every application for credit cards and car loans. This would drive customers away from their banks and financial institutions. However, lenders need to protect themselves by making sure that they do not discriminate against individuals who have bad credit scores. In other words, they want to do business with responsible individuals who are not likely to default on their loan obligations.
Fortunately for you
there is a solution to lenders that makes use of the three credit bureaus. You can pay to get the forms you need online so you can easily compare them. By doing so, you will be able to see exactly which credit inquiries will raise your credit score the most.
There are a lot of reasons why employers make use of these credit checks
For example, some companies do a full credit check when they apply for jobs. They may look at your criminal record, your financial history, and you may be asked about your marital status as well. When you work for an employer, they want to make sure that you are stable and are not likely to quit their company before completing the employment agreement. The more credit checks that an employer performs on you, the better off they will be in terms of finding a qualified employee to do the job.