View Your FICO Score before Applying for Debt Consolidation Loan

By Francine L. Huff
Mortgage Credit Problems Columnist

Your FICO score is an important indicator of your financial health. When you apply for a debt consolidation loan, most lenders will pull your FICO score to determine if you are a good risk. Here are the five main types of information that are used to arrive at a FICO score.

Payment History

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Before making a decision to approve a debt consolidation mortgage loan, most lenders want to know what your payment history has been like with other debts. About 35% of your FICO score is based upon your payment history; that includes whether or not you've had judgments, liens, foreclosures, or bankruptcies.

How Much Do You Owe?

About 30% of your FICO score is based upon how much you owe to creditors. If you're applying for a debt consolidation loan, lenders will want to know if you've used a high percentage of the credit lines you already have. If you've reached the limit on your credit accounts, it may appear that you are overextended.

Your Credit History

About 15% your FICO score is based on the length of your credit history. The longer your credit history the higher your score will probably be depending upon other information in your credit report.

New Credit Pitfalls

Avoid opening new credit lines if you're planning to apply for a debt consolidation home loan because it may lower your score even if you have a long credit history. Your FICO score is based about 10% upon the number of new credit accounts you have. Keep in mind that too many credit requests may be a red flag to creditors and lower your FICO score.

What Is Your Credit Mix?

The FICO score will be based about 10% upon the mix of credit you have. If you have a variety of accounts, such as installment, revolving, or mortgage loans, it shows that you have experience with different types of credit.

Don't wait to examine your FICO score until you apply for a debt consolidation loan. Check it at least six to 12 months before applying for a large loan so you have time to clean up your finances and raise your FICO score if needed.


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