Qualifications for a line of credit
This article will give you a quick rundown of the different factors used to determine whether you will be approved or denied for a line of credit. This can allow you to build a plan of attack to present your best possible financial case when applying for a line of credit. With underwriting, there are three main factors which come into play. The first factor is your debt to income ratio. With this, the underwriters will look at all of your debts on your credit report and what the minimum monthly payments are. This is listed on the credit report for every credit account you currently have which is open. The underwriters will also want to know how much you have to pay for rent if this is not listed on your credit report. The usual rule of thumb is that your debt to income ratio will not exceed forty percent of your income. This changes per bank or credit union but is a good figure to keep in mind. The second factor to consider is your credit score. You want to have a good credit score and a score over 700 is usually considered a strong score. Factors which go into your credit score include whether your outstanding balances on your credit cards exceed 50% of the credit limit and other information such as collections, bankruptcy, and judgments which can appear against you The third factor which goes into play is how long you have been living at your residence and been at your current job. These two pieces of information can determine whether you have stability. Underwriters are more willing to lend to people with good stability because there is less of a credit risk. The third factor is not as important as your ability to repay and your credit history. These three factors explain the bulk of the decision making process for a line of credit.
Related posts
Short URL: http://credit-deal.com/?p=160
Posted by Credit Specialist
on Dec 27 2008. Filed under Credit Score.
You can follow any responses to this entry through the RSS 2.0.
You can leave a response or trackback to this entry
