Private lenders can get a bit of extra help from your credit score if you’re an applicant for a mortgage.
According to a report from the Federal Reserve Bank of St. Louis, private lenders are also seeing their credit scores go up if you apply for a loan.
Private lenders can’t be held responsible for the actions of the lenders they work with, and private lenders can also claim that they’re providing a service to borrowers that is not necessarily what they promised.
That’s what led to the new law requiring lenders to report private lender transactions to the Federal Trade Commission.
The Federal Reserve report also noted that private lenders also get credit score boosts from their mortgage-based loans and are more likely to offer better financing.
If you’re considering a mortgage, here’s what you need read: What private lenders need to understand: How private lenders use the credit score to determine the interest rates you’ll pay on your loan.
What private lender information lenders collect from you: The lenders credit histories.
The type of loan.
The types of loans they offer.
How lenders compare their rates to you.
Which private lender does it better: Borrowers who are applying for a high-risk, high-interest loan, or borrowers who are trying to get out of debt.
What you can do about private lender behavior: If a lender uses your credit history to decide what loan you get, ask the lender if they have a policy against private lenders using their credit reports to rate you.
Ask if they do not use credit reports for their mortgage lending.
Ask the lender to stop using your credit scores to rate loans to borrowers they’ve loaned to before.
Do not let a lender pressure you into getting a loan by telling you that your credit is bad, or that you need a new loan because you’re getting too high interest rates.
Follow these steps to prevent private lender fraud: