Credit Factors

Three Factors to Know
to Get Approved for Loans

The following three credit factors can make a big FICO score essentially meaningless. Don't pass the lenders requirements in one of these areas and instead of them showing you the money, they'll be showing you the door! Here's what it takes to get approved for auto loans and more...

Three Very
Important Credit Factors


Ability is the ability to pay back the loan. Do you make enough money to cover this new monthly payment you'll be taking on?

There are two areas auto lenders look at here:

  • Payment to Income ratio -
    For auto loans, this is your new car payment divided by your gross monthly income. Most lenders allow 15-20%. In other words, if you make $3,000 (gross) each month, then the lender would only you to have a maximum payment between $450 and $600 depending on what percentage they allow.
  • Debt to Income ratio -
    Total monthly out go (from credit report) divided by your gross monthly income. For auto lenders they will typically allow between 40-50%. If you make $3,000 (gross) a month, then the maximum monthly debt you could have (including your new car payment) would be between $1,200 and $1,500, again depending on what percentage they allow.


Stability gives an auto lender an idea of how grounded you are. A "more stable customer" will have a good work history, not a new job in a new line of work every 3-6 months.

The same applies for residence history:

It's bad if you were delivering pizzas in Las Vegas in January, then in May you lived in Montana mending fences on a ranch and now, in August, you are in Los Angeles working in a video store.

You would be considered a higher risk!

It's okay if you were a Nurse in New York for 5 years and then relocated to Arizona and went to work once again as a Nurse. Lenders will consider your history here and shouldn't have a problem.

Past Credit History

The last credit factor is your Past Credit History, which is broken down for each individual credit tier on the FICO Score - Credit Tier page.

Basically, what and who have you paid in the past. Have you paid anyone in a timely fashion? Some in a timely fashion? All in a timely fashion?

Your intentions to repay in a timely matter may be good, but what you have, or have not, done in the past is how lenders are going to score you now.

You may be wondering why I did not include FICO score as one of the main credit factors! Well, your FICO score (credit score, beacon score, etc.) does not really mean much for actually getting you approved whether it be for auto loans or any other loan.

What your FICO score does do is:

  1. Get's You in the Door -

    Many lenders set a minimum FICO score before they will even take a look at your loan. For instance, many prime auto lenders require a minimum FICO score of 680 or above to even consider your loan. Don't have a 680 score or above and you won't even get in the door.

  2. Figures Your Interest Rate (APR) -

    If you've passed the lenders requirements for the three credit factors above, then your score (for most lenders) will be what the lender uses to figure interest rate (APR). They use the score here to avoid any discrimination lawsuits as it keeps it fair for all and is easily explained as to why person A and person B got different rates.

Return from Credit Factors to FICO Score and Credit Tiers

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