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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.

Although your housing expenses may not be part of your credit report, they are still of great interest to the underwriters. Although there is no set rule as to a good debt to income ratio, it is commonly recognized that it shouldn’t surpass forty percent of your earnings.

It is also important to be have a good credit score. If your score surpasses 700, most would deem that to be a respectable 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 length of time you have inhabited your current home and worked at your current employment are important factors as well as they help to establish stability.

Although not as important as your credit history or capacity to pay back, stability is still very important. You are more like to receive a line of credit as your credit risk is thus decreased.

These three factors explain the bulk of the decision making process for a line of credit.

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