Securing Boat Financing: Understanding Your Credit
In todayís world it is imperative that you understand how your credit can impact your financial choices. It is essential that you know the fundamentals of credit reporting and monitor your credit reports on a regular basis. To obtain a loan, particularly a boat loan, you must have higher than average credit to secure the best interest rate possible.
Understanding your credit report and leveraging your credit profile can be very difficult. In order to help you better understand your credit SeaDream Boat Financing has assembled this comprehensive resource guide to help you better understand your credit report in order to obtain a sensible marine loan.
STEP ONE: Obtain Credit Reports
The first step to understanding your credit is to obtain and review a copy of your credit report annually. There are many online sources for credit reports including CreditReport.com which will let you see your credit scores.
STEP TWO: Understanding Your Report
Unfortunately reviewing and comprehending your credit report can often be confusing. SeaDream recommends that you download the Understanding credit reports brochure at http://www.ftc.gov/bcp/menus/consumer/credit/reports.shtm
STEP THREE: Ensuring Report Accuracy
After you read the brochure you should have a better understanding of how to read your credit report. The next step is read your report and look for errors. It is imperative that your report reflect an accurate depiction of your credit profile. Mistakes happen frequently and errors are posted to your credit report without your knowledge. You canít allow this to go unchecked.
If you have been a victim of identity theft or have filed for bankruptcy, it is even more important that you monitor your credit and you act quickly in the event of a discrepancy. We recommend signing up for a credit monitoring service like Experian. To find out more information about identity theft, you may visit a website sponsored by the Federal Trade Commission http://www.consumer.gov/idtheft/ .
Repairing your credit may take some time and effort on your part. A stronger credit report will save you thousands of dollars in interest savings and give you the freedom to secure the financing you need to purchase the boat of your dreams.
Please visit Federal Trade Commissionís sponsored website at http://www.ftc.gov/bcp/menus/consumer/credit/reports.shtm or refer to the brochure youíve downloaded for step by step directions on repairing your credit and credit bureau contact information.
STEP FOUR Ė Understanding Boat Loans
What are the key credit report factors taken into consideration when applying for a boat loan? First and foremost, lenders want to know that your monetary obligations are current and up to date. For example, delinquent accounts, charge offs, and or a history of late payments to your creditors wonít entice a lender to offer a loan on your behalf. If you owe money to creditors, make sure that youíve paid them off first and ensure that your credit report reflects the payment.
Lenders will not approve loans for those that disregard their financial responsibilities. Itís important to understand that a boat is a discretionary item. Why would a bank lend you money to have fun in a boat if you canít make your mortgage payment.
Identity Theft Victims
If youíve been a victim of identity theft, you will need to clear up the matter before applying for a loan. This may require legal council. Please refer to our resource noted it step three. A lender will not be able to make an informed loan decision until this matter is resolved and your credit profile is accurate.
Poor Credit or Bankruptcy
If youíve filed for bankruptcy or are looking to rebuild your credit, there are lenders that are available to help. Credit unions and sub-prime lending sources are available in these situations. (Note: Most prime lending sources that offer better market interest rates will not finance to someone who has recently filed for bankruptcy. Typically, lenders will require a minimum of 3 years positive credit reestablishment.) Be mindful however, interest rates and loan terms for high risk loans will not match those offered by prime lenders. Typically, these marine loans have higher interest rates and shorter terms.
Lenders will also evaluate the credit history noted on your credit report to make an informed decision on a marine loan. They will look at comparable installment credit and duration of that credit history. For instance, a lender would like to see that youíve had installment loans of equal or greater size, in positive standing, for sometime. This will give the lender peace of mind in knowing that a potential customer can afford a recreational item. Lenders donít feel comfortable financing discretionary purchases for someone who has limited or no comparable credit in their past. This is just too risky for them. You need to show that you are solid as a rock and your positive comparable credit history will help guide their decision.
Lastly, lenders will calculate the debt noted on your credit report, along with your annual income to produce a ratio of installment debt to income. Typically, lenders require that your debt to income ratio, including your boat payment, fall within the 30-40% range based on your gross income.
Lenders realize that life is full of uncertainties. For example, if you were to lose your job or become seriously ill - this would require a shift in your monetary expenditures. Lenders feel that a debt to income ratio above this range would increase the risk of default and could cause you financial harm.
Although there are additional factors considered in a boat loan, you have now been equipped with the essential information pertaining to better understanding your credit and how lenders base their decision on your credit profile.
SeaDream is structured to aid you in obtaining the best possible loan based on your credit profile. We know what our lenders are looking for and will work to find you the best marine loan on the market today.
About the Author:
Tom Schumacher is the president of SeaDream Inc. Boat Loans and Boat Insurance - http://www.seadreaminc.com.-the leader in new and used boat loans, boat refinancing, and bad credit boat financing.