There are 6 other leading factors, in addition to credit score, that
will determine a consumer's likelihood to be approved for a credit
Credit Card Utilization:
Just like with your credit score, the amount of available credit you
use can have an impact on your credit card approval. Simply put, if
your existing credit cards are maxed out, you may be more risky than
someone who has the same exact credit score who is not maxed out.
Recent Hard Inquiries:
In many respects, you can think of recent inquiries as a sign of
desperation which we can all agree is probably a bad risk for any
lender to take on. If you have several recent inquiries, it suggests
that you either didn't get the credit you requested (denied, a
negative factor) or you did get the credit and it wasn't enough to
meet your needs (another negative factor).
Age of Oldest Trade:
The ability to maintain accounts in good standing speaks volumes about
the borrower. Lenders like to see a long history of open accounts,
which in many cases means more than 2 or 3 years. While you can argue
2-3 years is a strong indicator of creditworthiness, it is still a
short time frame from a lender's point of view. In those 2 or 3 years,
you probably haven't been laid off, gone through a recession, or
experienced many major life events. On the other hand, if you have 10
years of credit history and maintained your accounts, it says a lot
about your level of responsibility and financial management. On a side
note, if a consumer has few accounts or a very short length of credit
history, it is often called a "thin file."
Number of 30-Day Delinquencies:
Fool me once, shame on you, fool me twice, shame on me. That, in many
ways, is how lenders feel about delinquencies. If you have a habit of
paying late regardless of your score, be prepared to suffer the
consequences when it comes to credit approval. Delinquencies, even
minor ones, are a red flag for lenders. That is why you should ALWAYS
pay bills on time.
Presence of a Mortgage:
Owning a home can actually help you when it comes to underwriting.
Mortgages denote stability and suggest that your credit is strong
enough to support a high dollar loan. This metric is often a
tie-breaker type criterion, so don't get a mortgage just to improve
your underwriting probability.
Presence of an Installment Loan:
Just like a mortgage, installment loans demonstrate the breadth of
experience you have with accessing and managing credit. Often,
experience with more than just credit cards is seen as beneficial in
the eyes of a lender. Installment loans show a level of planning not
displayed in credit cards since installment loans have a fixed monthly
payment which often require more discipline and budgeting, both of
which are often a plus.