Credit Scores

As you are aware, lenders now look at credit scores when making their decision to lend money. We previously mentioned that the lender will be looking at the cash flow of the property. This proves your ability to repay the loan. In addition, the lender will want to know your willingness to pay back the loan and that will be determined by your credit report but in an easier manner for the lender's decision-making process, they will look at your credit score.

Your credit score is determined by five different factors. They are as follows:

Your payment history
Your total debt as it is related to your total available credit
The length of time your credit lines have been established—the longer the better
Type of loans established: installment loans vs. revolving loans (installment loans are better), bank loans vs. finance companies (bank loans are better)
Recent inquiries applying for new credit within the past 12 months

If your credit scores are above 700, then you will not have an issue with getting the best interests determined by that factor. If your credit scores are below 620, then you most likely will see a higher interest rate to make up for the lender's perceived risk.