2019 Idaho Real Estate Blog

Five Factors Of Credit Scoring -- How Much You Owe Main Boise Home Loans
30% of your credit score is calculated by looking at your debt ratio...or how much you owe creditors and how you manage that debt.


Dear reader:

It has been widely reported that household debt has been going up and up and up while incomes are shrinking. The Federal Reserve and other agencies have been reporting on this topic for some time now. Personal bankruptcy laws have tightened and minimum payments on credit cards have more than doubled...this has left us with a big consumer debt problem in this country. You NEED to understand how your credit score is being impacted by your management (or mis-management) of your consumer debt.

In lending, we refer to this portion of your credit score as debt ratio. Your credit scores are negatively impacted when you are untilizing a high percentage of your available credit. It gives an impression that you have overextended yourself.

There are two types of credit in this portion of your score: Revolving Debt and Installment Debt. Revolving refers to credit cards, in-store cards, and some home equity lines of credit. Installment refers to mortgages, car and student loans, and home equity lines of credit. By far, your utilization of revolving debt is looked at much closer and impacts your score much more than your usage of installment debt.

Fair Isaac and Co. says that the following elements are considered when calculating this portion of your credit score:

  • Amount you owe on your credit accounts
  • Amount you owe on specific types types of accounts
  • Number of accounts with balances
  • Proportion of balances to total credit limits on revolving accounts
  • Amount of installment loan amounts still owing when compared to original loan balance

This portion of your score is actually one of the easiet to improve on. In my next entry, I'll go over some ways that you can improve this portion of your credit score quickly...and permanently!

If you are interested in talking more about this post or a specific credit scoring issue you have or know about, feel free to call me at (208) 880-0316, or email me at You can also visit my website at


Eric Leigh, Mortgage Consultant
2965 E. Tarpon Drive, Ste. 150
Meridian, ID 83642
(208) 880-0316
Posted by Eric Leigh at 4/10/2009 12:38:00 PM
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