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3. Getting Started on Your Credit and Managing Your Mortgage Obligation

What is Credit?

According to the Consumer Credit Act of 1994, credit covers a loan or any other advance or accommodation given by an individual or financial institution. By giving credit the lender is displaying trust that the person will pay for the facilities given or for the money borrowed.

What is Credit Rating?

Credit rating is an opinion on the creditworthiness of a person. When a lending institution is considering a loan application by a borrower, there are some key questions or some essential information that will be used to assess his/her creditworthiness. The following are some questions that are generally asked: -

  • Can you pay?

  • Where do you work?

  • How long have you been employed?

  • How stable is your job?

  • Does your income include variables such as overtime or bonus?

  • How much do you owe and how much is the repayment obligation?

  • Do you have lots of debts?

  • Do you make payment on time?

  • Do you have a lot of credit enquiries?

  • Do you have equity to protect?

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