Analyzing Liabilities

An applicant's liabilities regularly play a limiting role in the applicant's search for credit. The applicant's income establishes the maximum amount of credit that the consumer can carry; that applicant's liabilities chip away at that maximum. The current balances on certain liabilities may also harm the applicant's credit grade.

For example, an applicant's income may initially qualify him or her for a $200,000 loan. However, if the applicant has other major debts that require regular payments, the loan amount for which the applicant may qualify will decrease.

This article will review two areas of concern regarding the applicant's liabilities:

  1. Qualifying liabilities
  2. Types of liabilities
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