Credit scores are calculated using several pieces of data in your credit report. It takes time and effort to build a great credit score, but the higher your score, the more likely you are to receive good rates and lending options.

When reviewing your credit score, keep in mind that it’s not final. Good credit requires discipline but will significantly affect your overall financial life for the better. I would love to review your credit report with you and discuss some changes you can make to put yourself in the best position possible for your home loan.

There are five key components that make up your credit score, and each one accounts for a certain percentage of the overall score:

1. Payment history  has one of the biggest impacts on your credit score. A few late payments will not automatically tank your score, but a history of late payments certainly can. How late the payment is will also affect your score, as payments made 60 or 90 days late will be more detrimental than payments made 30 days late.


2. Money owed  (total debt) on credit accounts doesn’t necessarily make you a high-risk borrower. However, if you have used a large percentage of your available credit, this could indicate you are overextended and more likely to make late payments. If you can, pay your credit card bill in full each month.


3. Age of your credit  – The amount of time you’ve held credit accounts reflects the length of your experience with the credit system. The longer your credit history, the more information lenders have to determine your behavior and make an accurate assessment of risk.


4. Mix of credit  – Your score may vary depending on your cards, retail accounts, installment loans, mortgage loans and other accounts. It’s a good idea to have a solid history of paying off multiple accounts of credit.


5. New credit accounts, when opened in a short period of time, could signal that you are a high-risk borrower, especially if you don’t have a long credit history. New accounts will also lower your average account age, which will have an effect on your score as well.

Call me today to set up an appointment, and I can pull a copy of your credit report for our meeting. I am happy to show you what impacted your score and help you understand how to become a successful homebuyer.