Understanding Credit

Your credit score is one of the factors that we consider before we get you pre-qualified for a home loan. Your credit score can range from 300 to 850. Credit scores are calculated by gathering information about you from five categories: your payment history, amounts owed on credit and debt, length of credit history, new credit, and types of credit used.

Types of Credit - 10%

This section includes any mortgage loans, auto loans, student loans, etc. that you have

New Credit - 10%

New applications for credit might cause you to appear risky and potentially lower your credit score.

Length of History - 15%

This shows us how long you’ve had credit. If you are going to close an account, DO NOT close your oldest account. Generally, the older your length of credit history, the higher your credit score will be.

Payment History - 35%

Be sure all of your bills are up to date and paid on time. This is the largest contributing factor of your credit score!

Debt Utilization - 30%

Your debt utilization is calculated based on your total balances compared to your total credit limits. Try not to exceed a debt utilization of 30%. For example, if your credit limit total between all of your credit cards is $5,000, don’t let your outstanding balances exceed $1,500.

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