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No matter if you are buying a home for the first time, looking to move into a new house, refinance your mortgage or take out an equity loan, your credit rating is going to impact the rate and terms of your mortgage, as well as the amount you are approved.

If you are someone that pays your bills on time, and does not have a lot of debt, you have a good credit rating and will have no problem getting a low rate mortgage loan that satisfies your financial needs. But, what if you don't have good credit?

Believe it or not, getting approved for a mortgage with bad credit is not difficult at all. In fact, Star Loans Services has many bad credit home loan products that will make your dreams of home ownership a reality.

Your Credit Does Not Have to Be 'Perfect' to Be Considered Good
If you have only a 1-3 blemishes on your credit report, Star Loan Services will simply request a written explanation as to why these negative marks have occurred. If your explanation is logical, we will likely excuse these isolated issues - particularly if these marks are old and your credit has been strong since.

Star Loan Services is most interested in what kind of credit practices have been exhibited over the last 1-2 years. Signs of good credit offer some flexibility for a rare late payment. When judging an applicants credit worth, we look at the following:

 -- Revolving credit - This means credit cards. You should have no more than two late payments for at least 60 days and no more than three payments 30 days late.
  -- Installment credit - This means car loans. You should have no more than one late payments for at least 60 days and no more than two payments 30 days late.
  -- Rent or mortgage payments - No more than one late payment.

Credit Scores  Are Not the Only Thing Looked at When Determining Your Credit Value
Determining your credit has become very sophisticated. Other factors are being used other than your score. For example, when determining what kind of risk applicants are, some lenders will look at how many credit cards are 'maxed out' (indications of the inability to manage and pay debt).

In addition, having many inquiries on your credit report is considered negative by some lenders. Too many inquiries is an indication that you have applied for, and been denied credit more than one time or that you have too much credit.

Star Loan Services has a lending network that gives us the flexibility to be more lenient in our credit ratings. Therefore, having maxed out credit cards and multiple credit inquiries is most likely not a major issue when applying for any type of mortgage or loan with us.

'Compensating Factors' Can Improve Your Credit Rating
Below is a list of some compensating factors:
  -- A hefty down payment.
  -- An existing loan or mortgage requiring large payments will exhibit your ability to cover larger than normal expenditures.
  -- A positive credit history will outweigh a current low net worth.
  -- A high net worth will outweigh a current low income.
  -- The probability of a career improvement and/or salary increase as a result of the furthering of your education and/or job training. This scenario is good for young adults with a high amount of student loan debt.

Maximizing Your Borrowing Power
In order to optimize your borrowing power, you must not only understand the 'compensating factors', you must know what your current report will reflect. For example, you may have a credit card account that you have not used in several years. This account needs to be closed immediately. Why? All open accounts on your credit report will be interpreted as available credit. Having too much available credit may label you as high risk.

Also, you want to make sure that your credit report is reflecting accurate, current information. Misinformation on your credit report-or, worse, the damage incurred as a result of identity theft can not only hurt the interest rate you receive, your chances for approval become jeopardized. If there is misinformation listed on your report, you must learn how to dispute and remove inaccuracies.

Getting a Copy of Your Credit Report Regularly Puts You In Power
Any financially smart consumer will check their credit report regularly. Regularly means getting a copy of your credit report at least once a year. You want to know what your mortgage lender or any creditor is going to see when you apply for your loan. You want to be able to spot and remove inaccuracies quickly. You also want to make sure all of your accounts are listed and reporting up-to-date.

Star Loan Services offers several different options for checking your credit. We suggest purchasing the Credit Monitoring System. The Credit Monitoring System makes it simple for you to keeps close tabs of the information listed on your credit file. Not only will you get one free month membership when you enroll, you will get a free copy of your credit report. Learn more about credit reports.

Additional articles related to credit reports:
Credit Score Basics
Understanding How Your Credit Score is Calculated
How to Improve Your Credit Score



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