Pre approval scoring is the financial equivalent of getting the approval you want for credit cards, loans or mortgages before applying. When you use a pre-approval scoring model, you are getting an early indication of your credit score. If you have high scores, you can go to lenders confidently and obtain the credit or financing you need. This may save you time, money and headaches.
Credit scores are based on many factors. Your payment history is one of those factors. A good payment history indicates that you will be able to make your credit payments when they become due. Lenders use your score to predict how likely it is you will be able to make your monthly obligations.
Credit scorecards often measure variation across several factors. The credit scorecard measures the amount of variation across three or more factors. Most credit scorecards include a formula for computing a score for each potential customer. That formula takes into account how much you have already spent and your current level of debt relative to your income.
There are differences between the actual credit score and the estimated credit score. Real time pre approval scoring models take into consideration the current level of debt as well as the length of time since you last paid bills. These factors are used to predict how likely you will be able to pay off this debt. Once the real-time model has calculated your score, it is provided to your creditors for approval. They typically look at the pre approval scoring model and approve you for the credit or loan.
If you don’t get approved, you may find that your scorecard contains a number you can’t live without. This number is called the rejection ratio. This number tells you how many pre approval scoring models the lender has used to determine your credit worthiness. It’s a numbers game; if you are more likely to be rejected than other applicants, you need to work hard on increasing your score.
The good news is that there are solutions available for those who experience pre approval scoring problems. The best solution is to negotiate with your lender. Keep in mind that most lenders want to see as much documentation as possible so they don’t have to take your word for it. Take the time to list all the information that you can provide and use as much of it as possible. Remember, lenders get more money from a borrower that has good credit. As such, you can increase your pre approval rating by paying down any outstanding balances.
You can also use the services of a professional debt counselor to get out of debt. Counselors will work with you to consolidate your bills and create a budget. When done properly, this will allow you to pay off your debts in about five years. In the meantime, make sure you stay on top of your debt by tracking any new applications for loans or credit cards. If you have found something you qualify for, you need to move quickly because the terms will soon become available.
Finally, remember that bad credit will not prevent you from getting approved for a great loan. Even if you have less than perfect credit, you can still qualify for a great loan if you know how to negotiate your way through the process. This is why pre approval scoring is important; it lets you know if you are indeed a candidate for a loan. Once you know where you stand with lenders, you can then focus on building better credit and increasing your score so that you can qualify for the best rates and terms available.