The second area that contributes to a highquality credit profile is what I call your “ revolving accounts portfolio .” This is the collection of all of your revolving accounts : credit cards , credit lines , charge cards , and HELOCs ( home equity lines of credit ). The most important score contribution to you ’ re revolving accounts portfolio is your balance to limit ratio ( known in the industry as utilization ), followed by the average age of your revolving accounts portfolio . Next priority is the quality of each individual account . Quality is defined by the “ tier ” of the lending institution and the contribution of the account to the quality of the profile . While I can ' t go into great detail here , you need to know credit instrument quality ranges from Tier 1 banks and 100 % contribution to Tier 4 lenders and 40 % contribution . Until now , we were never trained on how to build a highquality fundable credit profile and so many of us have lowvalue “ junk ” cards which show a lender a lack of credit sophistication .
The third area of a highquality credit profile is your installment loan portfolio . As with your revolving account portfolio , you can have a Tier 1 , 100 % quality loan , and you can have a Tier 4 , 40 % quality loan . The quality of the loan contributes to or detracts from the quality of your credit profile and the quality of your credit profile determines your fundability .
Are you FUNDABLE , or Do You Just Have a Good Score ?
The next contributor to a highquality credit profile are your inquiries . Inquiries count against your credit score for 12 months , but what we were not told is that the inquiries count against underwriting and fundability for 24 months . FICO ® and lender underwriting software downgrade your fundability significantly when you have too many inquiries . How many is too many ? FICO ® allows one inquiry per six months without a significant degradation of your credit score or fundability .