Credit Cards, Bills, Etc.

In order to determine the interest rate that is appropriate for a loan applicant, a lender must evaluate the candidate's past credit performance. If the loan is a mortgage, lenders typically look for an individual to have 3 or 4 separate lines of credit that are managed successfully. Lines of credit simply refer to the various types of loans an individual can have (e.g., credit cards, car loans, student loans, etc.). In certain circumstances, the absence of a credit history can harm an individual's ability to obtain financing, since the lender has no way of assessing the applicant's past credit performance. This lack of credit history can lead to the individual either not qualifying for the loan, or to their qualifying at a much higher rate of interest.