A
After one inquiry per six months, there is a steep pointloss curve as you
incur more inquiries. Additionally the quality of the accounts you are
applying for will impact your credit profile. Finance companies, mall store
cards, and other lowgrade credit instruments have a greater negative
impact against your score than higher tiered credit instruments.
Finally, the most powerful negative contribution to your profile and
fundability is the presence of derogatory accounts or other negative indicators. The credit
repair industry has increased borrower awareness about the negative impact of bad
credit. Unfortunately, credit repair is not a solution that will help your fundability. Credit
repair companies offer a meager dispute letter writing campaign in the hopes of removing
a few negative accounts. While the removal of these accounts may improve your score a
little, it does not improve the essential nature of your fundability as we've described in this
section—credit repair does not help you build a powerful FUNDABLE credit profile.
B
By definition credit repair strategies and those service providers who offer
them, are completely ignorant of fundability and do not know how to create a
credit profile that will contribute to credit approvals. In fact, most credit repair
firms, in a feeble attempt to help their clients “rebuild” their credit, refer them
to lowvalue junk credit instruments, etc. These junk cards pay referral fees
so the credit repair company wins, but the clients take another hit to their
credit. It is a travesty how much ignorance there is among organizations
who say they are trying to help disadvantaged borrowers.
Let's take a look now at the final fundability factor: underwriting. Underwriting software
expands the requirements of fundability significantly. Since it is the lender that is actually
extending the credit (and carrying all the risk), lenders have developed (in concert with
FICO®) their own underwriting criteria and software.
Underwriting software takes into account credit score, income, debt load, current banking
relationship (checking account, average daily balance, recency of last bounced check) and
the 24 month lookback period. Underwriting software calculates behaviors over the
preceding 24 months and measures it in a logarithmic scale. A borrower’s behavior over the
last 24 months is the key indicator of what the borrower's behavior will be for over the next 24
months. The 24month lookback period cannot be underestimated in its importance to your
fundability.