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The Five Factors

General Mark Goode 28 Mar

What the credit scoring model seeks to quantify is how likely [you,] the consumer is to pay off their debt without being more than 90 days late on a payment at any time in the future.

Credit scores can range between a low score of 300 and a high of 850. The higher the [your] score is, the less likely they are to default on a loan. Only a very rare 1/1,300 people in the United States has a credit score of above 800. These are the people who walk away with the best interest rates. On the other hand, 1/8 prospective home buyers are faced with the scenario that they may not qualify for the loan they want because they have a lower score, between 500 and 600.

This score comprises five factors.
I will list these in order of importance, just as your underwriter will look at the score:

Payment History: 35 percent impact. Paying debt on time and in full has a positive impact. Late payment, judgments and charge offs have a negative impact. Missing a high payment has a more severe impact than missing a low payment.

Outstanding Credit Balances: 30 percent impact: The ratio marking the difference between the outstanding balance and the available credit is important here. Ideally, the client should keep their balance below 10 percent of the available credit limit. Ideally, the client should keep their Balance of the body of the available credit limit.  

Credit history 15% impact: This marks the length of time since a particular credit line was established borrower is stronger in this area.

Type of credit 10% Impact: a mix of loans Credit cards and mortgages more positive than a concentration of debt from credit cards only.

Inquiries 10% of impact: This quantifies the numbers of inquiries that have been made on a consumer ’s credit history within a six-month period. Each hard inquiry can cost from two to 50 points on a credit score but the maximum number of inquiries that willreduce the score is 10. Eleven or more inquiries in a six-month period will have no further impact on the borrower’s credit score.

Mortgage Man – Dominion Lending Centres | FSCO# 12254 | 180 Memorial Avenue | Orillia, ON L3V 5X6 | Ph: 705-326-8523 | Fx: 705-326-8645 |

Article credit to: Tim Braheem President, First Rate Financial Group, Westlake Virginia, Calif., 818/707-4131, E-mail: All credits and copyrights to their respective owners on reposted articles. ~ Article may have been altered or edited from original. Corin Payie MMDLC