How Credit Can Impact Your Loan Amount
If you are thinking about how credit can impact your loan amount, then you’ve come to the right place. Loans affect more than just your credit. The lower the credit score, the lower that the banks want to offer you for loan amounts. Your credit reports show every loan that you currently have as well as the payments per month. A debt to income ratio is calculated which then tells them how much of your monthly income goes towards monthly payments. A lower ratio typically means that you have more available income to play with to put towards a given loan.
If you have a low credit score, then you probably will have a lower chance of getting approved for certain loans. Agencies and loan companies want to see that you have a proven track record of maintaining your credit as well as paying on-time payments. Having a higher credit score means that the banks and loan companies can put their trust in you. The bank doesn’t know you personally so they must go based off the credit score numbers. If you do have a strong credit score, then the dip in your score will be short and not significant. Usually, poor credit scores take dips that last longer and hit harder when they are ran. But you can avoid this by not taking on new debt before applying for something major.
You want to be smart when you run your credit, it does affect your loan amount and approval odds. For example, someone with a 700 credit versus someone with an 800 credit. If they both head to get an auto loan, the person with the 800 will receive a higher car loan total (this is without income being factored in). Your credit score is one but not the only factor that lenders use to decide the rate and loan amount. Another factor is your income per month. I think you now understand the importance of how credit can impact your loan amount. We do have over a decade of experience providing loans for successful rehabs, refinances, purchases, and new construction projects, contact us today at (832) 879-9055!
