Stay on top of your credit and debt
Explore resources to help you improve your credit and manage your debt.
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To find out whether you’re ready to take on new debt, measure your credit status against the criteria that lenders use when they review your application. At Wells Fargo, we call this the 5 Cs of Credit.
Get started by reviewing 3 of the most important factors that you can influence:
If you want insight into your credit history, take a look at your credit report and credit score. It’s the primary indicator of overall credit activity, which includes any credit accounts you have opened (or closed), as well as your payment history over the past 7 – 10 years. Reviewing your credit score is one of the quickest ways to assess your current credit situation.
In addition to your credit history, many lenders also considers your history as a customer. Since lenders look at your overall financial responsibility on top of your credit history, your relationship with your bank can be valuable as you look for new credit.
A good credit score shows lenders that you have responsibly managed your debt and have consistently made timely payments on your accounts.
Compare credit score versus credit report
Access your free annual credit report annually from all three national credit bureaus and make sure your credit history is accurate and free from errors. You can also receive a credit score when you request your report, but there may be a fee.
Get your free annual credit report
Your credit score can impact interest rates, your terms, or the amount of your loan. The better your credit score, the more money you may save on interest rates.
For example, with a good credit score and a loan of $15,000 at 10%, you would pay $391 per month.
Your ability to repay indicates how comfortably and consistently you’ll be able to make payments on your loan. Lenders use different factors to determine your ability to repay, including your monthly income and monthly financial obligations (like loan payments, rent, and other bills), which we call your debt-to-income (DTI) ratio.
Lenders look at your DTI ratio when they’re determining whether or not to lend money or extend credit, as it helps them assess whether you’re able to take on new debt. A low DTI ratio is a good indicator that you have enough income to meet your monthly obligations, and take care of additional or unexpected expenses.
To calculate and understand your DTI, explore what factors contribute to it and see Wells Fargo standards for DTI ratio.
What Is Your DTI Ratio?
Collateral is a personal asset that you already own, such as your car, a savings account or a home.
Collateral is important to lenders because it offsets the risk they take when they offer loans. The good news is that using your assets as collateral broadens your borrowing options to include products that generally have lower interest rates and better terms. Remember: When you use an asset as collateral, you may have to forfeit it if the loan is not paid back.
If you have equity in your home or car, or have savings, you could potentially use it as collateral to secure a loan.
Here are a couple of ways your assets can help you:
This is for illustrative purposes only. The monthly payments and APR are based on an auto loan of $15,000 over a 4-year repayment schedule and a $99 application fee. Other products may have different rates and terms. All loans are subject to approval. Wells Fargo standards for credit score are: Excellent: 760+, Good: 700-759, Fair: 621-699, Poor: 620 and below.
Debt-to-income (DTI) ratio
Your debt-to-income ratio is the percentage of your monthly income that goes toward paying down debts and other monthly expenses like rent.