Many boat buyers are very worried about how their credit
report will affect their ability to buy a boat. Most people will
not need to worry about the effects of their credit history
during the boat loan process.
However, you can be better prepared if you get a copy of your
credit report to review before you apply for your boat loan.
That way, if there are any errors you can take steps to correct
them before you make your application.
If you have had credit problems, be prepared to discuss them
honestly with a boat loan professional. Responsible boat loan
professionals know there can be legitimate reasons for credit
problems, such as unemployment, illness or other financial
difficulties. If you had a problem that's been corrected, and
your payments have been on time for a year or more, your credit
may be considered satisfactory.
Credit Scores
The boat loan industry grades one's credit based on such
things such as payment history, amount of debt payments,
bankruptcies, equity position, credit scores, etc.
Here is a compiled a guide to help you estimate your credit
grade. This is only a guide as many companies have exceptions
that may result in more strict or more lenient guidelines.
A General Guide to Credit Grades
Credit
Debt
Max
Mortgage
Revolve
Install
Score
Ratio
LTV
30
60
90
30
60
90
30
60
90
A+
670
36
95
0
0
0
2
0
0
1
0
0
A-
660
45
95
1
1
1
3
1
0
2
0
0
B
620
50
85
2
1
0
4
2
1
3
1
0
C
580
55
75
4
2
1
6
5
2
5
4
1
D
550
60
70
5
3
2
8
8
4
7
6
2
E
520
65
60
6
4
3
10
10
6
10
8
3
Bankruptcy/Foreclosure
A+ None Allowed Within 10 years
A- Minimum 2 Years, Re-Established Credit
B Minimum 2 Years, Some Late
C Minimum 1 Year
D Discharged
E Possible Current
The figures shown here are estimates. When trying to figure
your credit grade, keep in mind the following principles:
Other Things Being Equal-When your have derogatory credit,
all of the other aspects of the loan need to be in order.
Equity, stability, income, documentation, assets, etc. play a
larger role in the approval decision.
Worst Case Scenario-When determining your grade, various
combinations are allowed, but the worst case will push your
grade to a lower credit guide. Mortgage Late and Bankruptcies
are the most important.
Going Once, Going Twice-Credit patterns are very important. A
high number of recent inquiries and more than a few outstanding
loans may signal a problem. A "willingness to pay" is
important, thus late payments in the same time period is better
than random late as they signal an effort to pay even after
falling behind.
Credit Guide Scoring
In a nutshell, credit scoring is a statistical method of
assessing the credit risk of a loan applicant. The score is a
number that rates the likelihood an individual will pay back a
loan. The score looks at the following items: past
delinquencies, derogatory payment behavior, current debt level,
length of credit history, types of credit, number of inquiries.
Credit scoring will place borrowers in one of three general
categories:
First, a borrower with a score above 680 and above may be
considered an A+ loan. The loan will involve basic underwriting,
probably through an "computerized automated
underwriting" system and be completed within minutes.
Borrowers falling in this category may have a good chance to
obtain a lower rate of interest and close their loan within a
couple of days.
Second, a score below 680 but above 620 may indicate
underwriters will take a closer look at the file in determining
potential risks. Borrowers falling in this category may find the
process and underwriting time no different than the past.
Supplemental credit documentation and letters of explanation may
be required before an underwriting decision is made. Loans
within this FICO scoring range may allow borrowers to obtain
"A" pricing, but loan closing may still take several
days or weeks as it does now.
Third, borrowers with a score below 620 may find themselves
locked out of the best loan rates and terms offered. Boat loan
professionals may divert these borrowers to alternate funding
sources. Borrowers may find the loan terms and conditions less
attractive than the "A" loans, and it may take some
time before a suitable funding source is located.
As more companies utilize credit scoring, the loan approval
and closing will be compressed for most consumers. In the
future, a high FICO score may be your ticket to a speedy and
competitively priced boat loan.
Credit Reporting Agencies
Equifax
PO Box 105873
Atlanta, GA 30348
(800) 685-1111
Experian
PO Box 8030
Layton, UT 84041-8030
(800) 520-1221
Trans-Union
PO Box 390
Springfield, PA 19064
(800) 916-8800
Correcting Your Credit Report
You have the right, under the Fair Credit Reporting Act, to
dispute the completeness and accuracy of information in your
credit file. When a credit reporting agency receives a dispute,
it must reinvestigate and record the current status of the
disputed items within a "reasonable period of time,"
unless it believes the dispute is "frivolous or
irrelevant." If the credit reporting agency cannot verify a
disputed item, it must delete it. If your report contains
erroneous information, the credit reporting agency must correct
it.
If an item is incomplete, the credit reporting agency must
complete it. For example, if your file showed that you were late
in making payments on accounts, but failed to show that you were
no longer delinquent, the credit reporting agency must show that
your payments are now current. Or if your file showed an account
that belongs only to another person, the credit reporting agency
would have to delete it. Also, at your request, the credit
reporting agency must send a notice of correction to any report
recipient who has checked your file in the past six months.
For those items in your credit profile which you feel deserve
further explanation (such as an account that was paid late due
to the loss of job, military call-up, or unexpected medical
bills), you may send a brief statement to the appropriate credit
reporting agency. The information will be placed on your credit
profile and will be disclosed each time your credit profile is
accessed.
Credit Profile
A Credit Profile refers to a consumer credit file, which is
made up of various consumer credit reporting agencies. It is a
picture of how you (as an individual) paid back the companies
you have borrowed money from, or how you have met other
financial obligations.
There are usually five categories of
information on a credit profile:
Identifying Information
Employment Information
Credit Information
Public Record Information
Inquiries
What is "NOT" included on your on a
credit profile:
Your income
Your race
Your religion
Your health
Your driving record
Your criminal record
Your political preference
Credit Report Access
The Fair Credit Reporting Act (FCRA) outlines specifically
who can see your credit profile. Businesses must have a
"legitimate business need," and a "permissible
purpose," as stated in the federal law to obtain your
credit file.
Otherwise, only you, and only those who you give written
permission, can access your credit files. Your neighbors,
friends, co-workers, and even your family members cannot have
access to your credit profile unless you authorize it. Some
examples of those who can access your credit files are:
Credit grantors
Collection agencies
Insurance companies
Employers
Any company that receives a copy of your credit profile will
be listed under the "Inquiry" section of your report.
The Fair Credit Reporting Act (FCRA) is the federal law
regulating credit reporting companies like Equifax, Esperian,
and Trans Union. It has been in effect since 1971. A revised
FCRA became effective October 1, 1997. This law protects
consumers' rights, such as the right to review and contest
information in their credit profiles it also specifically
defines who can access the information in a credit profile, and
how you are notified of this activity.
Credit Questions &
Answers
Why do we need credit reporting?
Credit reporting is needed because it provides the
information that helps consumers make purchases, secure loans,
pay for college educations, and manage their personal finances.
Credit reporting makes it possible for stores to accept your
checks, banks to offer credit and debit cards, businesses to
market products, and corporations to better manage their
operations to benefit the world's economy.
What is a credit inquiry?
An "inquiry" is a listing of the name of a credit
grantor, or authorized user who has accessed your credit file.
Each inquiry is posted to the credit file so you know who has
obtained a copy of it. Credit grantors post an inquiry before
offering you a pre-approval credit card application. These are
listed as "promotional" inquiries on your credit file
because only your name and address were accessed, not your
credit history information. They are NOT sent to credit grantors
or businesses for reasons of credit reporting. They
are listed for your informational purposes only.
How does divorce affect consumer credit?
A divorce decree does not supersede the original contract
with the creditor, and does not release you from legal
responsibility on any accounts. You must contact each creditor
individually and seek their legal binding release of your
obligation. Only after that release can your credit history be
updated accordingly.
Should I use one of those companies that promise to help
correct my credit?
It's your choice. However, beware of companies that promise
to remove accurate information from your credit file. Accurate
information cannot be removed from a credit file. There is
nothing they can do for you that you cannot do for yourself by
contacting the credit reporting agencies directly. Only time
will heal a delinquent credit history.
Ends 12/26 