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Non-Credit Factors That Lenders and Businesses Consider


It’s true that your credit score is a mighty number. It’s one of the most important factors that creditors and lenders consider when they’re approving your applications. But, you can’t always rely on a good credit score to get you approved. Likewise, a bad credit score won’t always lead to denial. Businesses consider a few other factors in addition to your credit score.

Your Age

Because of the Equal Credit Opportunity Act, lenders can’t discriminate because of your age. However, you do need to be old enough to sign a contract before you can get a credit card, loan, or lease. In most states, that age is 18. Your age can also affect your insurance rate; younger drivers tend to have higher insurance rates because they have a higher likelihood of filing a claim.

Your Income

Your monthly or annual income is big factor that most businesses consider. That’s because your income directly influences your ability to repay what you’ve borrowed. Landlords, for example, expect your income to be 3 to 4 times your monthly rent to ensure that you comfortably make your rent payments. Credit card issuers and lenders also look for a certain income level depending on the credit limit or loan amount you’re seeking.

How Much Debt You Have

Your level of debt is one of the factors that affects your credit score, but lenders sometimes evaluate debt separate from your credit score. Your debt-to-income ratio measures how much of your monthly income goes toward debt payments. If your ratio is too high, it means you’re spending a lot of money on debt and may not be afford another debt payment. You can be turned down for having too much debt even though you have a good credit score.

Recent Delinquencies

While your credit score will reflect your payment history for the past several years, some businesses pay more attention to the most recent delinquencies. Not only do they consider the recency of the late payment, they also look at the type and number of delinquencies. For example, a recently 30-day late payment isn’t as bad a charge-off or collection account. And, just one late payment isn’t as bad as a string of them.

Evictions or Outstanding Lease Balances

Landlords usually want to know if you’ve ever been evicted or if you still owe another apartment complex. If either has happened in the past seven years, your credit report will probably show it. Clearing up a delinquent balance can improve your chances at getting approved, but it’s not a guarantee. Some landlords may require a clean rental history before they’ll lease an apartment to you.

Your Driving History

Insurance companies use a version credit score to price your insurance rate, but as you probably know, they also use your driving history and past insurance claims.

Other Types of Scores

Businesses use several other types of scores that aren’t necessarily available for consumer use. For example, there are insurance risk scores, mortgage risk scores, bankruptcy scores, even medication adherence scores that predict the likelihood that you’ll take your prescribed medication.

A great credit score will only get you so far. Consumers have to be good in other areas not just to have applications approved, but also to get approved with good rates.

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