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Credit Score Blueprint: Everything You Need to Know

What Other Factors (Besides Credit Score) Impact Your Interest Rates and Loan Eligibility?

While your credit score is the primary piece of information lenders consider to determine your loan eligibility and/or interest rate, they may also consider other factors. For example, while your credit score doesn’t reflect your salary, assets, or employment history, lenders may take these items into account. In addition to your debt ratio and other data from your credit report, banks and financial institutions may also take into account the following lifestyle factors when calculating your interest rate:

  • Length of time at current residence
  • Whether you rent or own (owning is preferable)
  • Length of employment at your current job (two or more years is preferable)
  • Education (college degree may earn you more credit)
  • Salary and net worth

Depending on the type of loan you’re applying for, lenders may also consider:

  • Down payment amount (for a mortgage loan)
  • Business plan (for a small business loan)
  • Project feasibility (for business loans)
  • Loan-to-value on your home (for mortgage refinance loans)

As with credit scoring agencies, lenders are legally prohibited from taking into account your age, race, gender, national origin or marital status when considering your credit application.

In November 2011, FICO and data provider CoreLogic announced the joint creation of a new type of score for mortgage lenders. This score will incorporate additional consumer information not included in FICO scores, such as payday loans, child support payments and evictions. Status of rent, utility and cellphone payments may also eventually be included in this score. Keep in mind however that it’s still unknown whether or not this new score will be embraced by lenders.

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