How To Improve Your Chances For Loan Approval


When it comes to taking out a loan, there are many factors that lenders are going to take into consideration. No matter what your purposes of taking out a loan may be, whether for a mortgage, small business or something else entirely, it is best to be prepared. Loans aren’t something you take out on a whim and much consideration needs to go into the process.

Just as you wouldn’t rush into purchasing a home or starting a business, don’t rush into securing the financing either. Take the necessary steps so you can put yourself in a position to have not only a better chance of being approved for a loan, but also better options from lenders as well.

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How Many Credit Scores Do I Have?

Credit scoring is a dynamic and plural process. You have heard about the importance of improving your credit score, but what about credit scores? That’s right: the average consumer has about 50. If you are surprised by this fact, you aren’t alone. You’ve probably heard of the three major credit bureaus: TransUnion, Experian and Equifax. Each company compiles a version of your credit report and a score to match. So far, you have three scores, but that isn’t the entire story. Why so many? Factors include:


The credit bureaus are the major score providers, but they aren’t the only ones in the industry. Suppose you sign up for an educational website that offers a free credit score summary. Although this score may be accurate based on your information, it isn’t provided by the Big Three or likely used in a loan application. This is just one example of the many forms and sources of credit scoring.


Like credit information, your score is constantly updating and potentially changing. For example, suppose you check your Experian score in August and pay off a major debt in September. Your score could improve by several points in a 30-day period. If a new generation of score is developed during that time, e.g., FICO 9 and the development of FICO 10, you will have scores to reflect the methodology of each model.

Math and models

When the first FICO score was developed in 1989, it measured creditworthiness based on the trends and technology of the time. Over the past 26 years, the original scoring model has been refined to analyze credit types more closely, including revolving accounts, medical debt and collection accounts. While your medical debts may have been judged more strictly with FICO 7, FICO 9 uses different methodology. Your information may also be weighted differently based on the type of credit you are applying for and its purpose.


The primary factor that produces multiple credit scores is purpose. The FICO model is ever-changing, especially when purpose is added to the equation. Lenders request consumer scores based on purpose. For example, a mortgage lender wants to review different risk factors than say, an auto lender. The result is several scores tailor-made to suit each credit type:

  • Auto
  • Mortgage
  • Credit
  • Installment loans
  • Personal finance

These five purposes are often broken down into smaller iterations. According to Bankrate, “Experian and Equifax each provide 16 different FICO credit scores to lenders: five iterations of the general risk score and up to three generations of the five industry scores. TransUnion provides 21 different FICO credit scores to lenders, six versions of the general score and up to four generations of the industry scores.”

The bottom line: You may have too many credit scores to count, but credit health is a singular goal. Focus on the Five Factors to ensure that each of your scores is in good shape.


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Do I Have Options Regarding Medical Bills?

x_0_0_0_14090067_800There is no easy solution to high medical debt. Even though you likely have health insurance, there are high costs that are easy to rack up if you need medical care, especially if it is an emergency. But when the option is incurring a high amount of debt, or not getting healthy, the debt is certainly easier to manage.

Unfortunately, medical debt is the thorn in many Americans’ sides. In fact, according to USA Today, medical debt was the largest cause of bankruptcy in the U.S. as of 2013. The total was about 1.7 million people who lived in households undergoing a bankruptcy claim due to health costs.

So before you start panicking about your high bills, know that you aren’t alone. This is not a situation in which people are unaware or unsympathetic. Medical debt is a real problem, but this also means there are options.

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Teaching Your Children About Money and Credit


It’s never too early to learn about money. During a child’s pre-college education, he or she learns a number of skills that may help him or her in a future career, but little focus is given to teaching kids how to manage money. Learning how to manage money and how credit works is an invaluable benefit to a child growing up in 2015.

Here are five tips on how you can help your children learn how to manage their finances starting today:

1. Pay kids for chores or give them an allowance

It’s difficult for kids to learn how to manage money if they don’t have money. Even young children can benefit from receiving small sums of money that give them the chance to make financial decisions. Rather than handing them money each week or after a chore, consider keeping a running balance sheet that allows the child to see how much money they have earned, and how much they have in savings. Allow them to “withdraw” money as needed from you. Visualizing debits and credits and a running balance will help kids see where their money is going.

2. Take time to explain to your kids how your credit card works

How many times have your kids seen you pull a plastic rectangle from your purse or wallet, pass it through another plastic device, and suddenly you’ve paid? It’s important that kids understand what’s happening behind the scenes when you pay with a credit card. Use a trip to a restaurant as a teaching opportunity. Explain about the bank lending you money, you borrowing money, and what happens if you don’t pay it off on time. Americans carry a lot of consumer debt, and understanding credit early on could prevent unnecessary heartache later.

3. Set up a savings account with a local bank for your kids

Money sitting in a piggy bank may teach kids the value of saving, but it misses an important teaching point–interest. By setting up a savings account for your older kids, you give them a chance to see the monthly effects of saving. When kids see their bank statements, they get to see the impact of lending their money to others. Saving doesn’t just protect your money for the future — it earns you more money.

4. Review your kids’ finances with them

Once your kids get older and have accounts of their own, take time to review their accounts with them. Help them learn how to analyze trends in their savings, and to compare how much they save to how much they spend. Not only will your kids learn how to analyze their own financial decisions, they’ll learn that analyzing their financial situation is important. Too many people wait to question their money habits until problems have already happened. Teach your kids to plan now.

5. Allow your kids opportunities to seeyour good financial habits

Many kids learn best by seeing others first. There’s no better way than to learn by example than from your own parents. Tell your kids about paying off your credit card each month. Talk about what kinds of purchases are worth taking on debt. Discuss what percentage of your earnings you try to set aside each month. Let your kids see times where you decide to not make a purchase because it’s too expensive. The more your kids see, the more they’ll learn.

Daniel Woolston is an associate attorney for Lexington Law Firm. Hewas born in Houston, Texas and raised in Sugarland, Texas. He received his B.S. in Political Science at Brigham Young University and his Juris Doctorate at Arizona State University.

A former prosecutor, Daniel has conducted numerous jury trials and hundreds of other court hearings. He has experience in legal writing, research, and general oral and written advocacy. Daniel especially enjoys being a voice for those that are often forgotten in the legal system. He is licensed to practice in Arizona. He is located in the Phoenix, Arizona office.

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Are Accounts Missing From Your Credit Report?


Credit health is a combination of good habits, credit bureau math, and complete information, but what happens when accounts are missing from your credit report? Below are a few examples of items you won’t find on your TransUnion, Experian and Equifax reports:

  • Utility providers. Water, sewage, gas, electricity and trash removal are essential, but the average provider does not report to the credit bureaus.
  • Cell phone companies. 96 percent of the world population has a cell phone, and yet, few accounts are reported on the millions of consumer credit reports.
  • Landlords. Small landlord companies rarely report business transactions to the credit bureaus.

  • Some retail store cards and layaway plans. Depending on the lender, a department store card or layaway plan may not appear on your credit report.
  • Medical bills. Medical bills are considered outstanding debt, but they do not appear on your credit report like a revolving or installment account.

So, what should you do if an account is missing from your credit report? Begin by contacting your lenders. Ask them about their credit reporting policies. If they are willing, ask them to report your positive information to the Big Three. Companies that value customer service are likely to honor your request.

Simple enough, right? Not quite. Although these accounts aren’t likely to appear on your credit reports without a personal request, a delinquency is another story. Non-reporters are quick to change their tune if your account is past due or goes into collections. The result is serious credit damage. The bottom line: Allow non-reported accounts to work in your favor. Practice responsibility by pursuing clean credit and complete information.

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