What Lenders Are Looking for on Your Credit Report

With the right habits you can get ahead of your lenders and get great rates

It is common knowledge that your financial history is reflected in your credit report. But knowing what lenders looking for and how can you make your report look its best to them when it comes time to try to get a loan can be a little harder. Diane Moogalian has the answers in her article on the Equifax Finance Blog titled “Building a Strong Credit Report from the Beginning.”

Lenders are looking for a number of signs that you are not only going to pay off debt in full and on time, but what kind of borrower you are. The kinds of accounts you currently have open will give clues to them, as will the amount of available credit you have. If you are risky and keep high balances near your credit limit, it will be harder for you to find lenders willing to give. It’s generally a good rule to get your balances below 30 percent of your limit, though lower is better.

When you look at your credit report, the different things lenders are looking for is shown in your trade lines, inquiry information and public record. Your trade lines are your accounts, and lenders place different weights on all the information about them, including the balance they carry, their type, payment history and how long the account has been open. Your inquiry information shows what other companies have requested your information in the past two years, and too many inquiries can lower your score. Finally, the public record shows judgments, tax liens, bankruptcies and other information which will affect how lenders view you.

For more information about your credit report and how to interpret it and build your score, be sure to read the full article on the Equifax Personal Finance Blog. There, you can also read informative articles on credit, insurance, tax, retirement, real estate and more.