5 Factors That Affect Your Credit Score

Knowing the variables that contribute to your credit score can help you qualify for a home purchase. Here is a quick rundown of the import factors.

• Many people know that checking your credit too often can hurt your score. But mortgage credit inquiries have special rules that can minimize this impact. Still, it is worth keeping credit checks to a minimum.

• How long your credit has been established is another factor. With all things being equal, just having accounts open over a longer length of time will help improve your scores. So even if you have an old credit card that you no longer use, keeping the account open can be beneficial to your score.

• Having a variety of types of credit is another factor. For example, having an installment loan, such as a car payment, revolving credit, such as a credit card you use each month, and a mortgage debt would all add diversity and strength to your credit profile.

The two biggest factors are your utilization ratio and payment history.

• The utilization ratio is the amount you owe on the card, as a percentage of the credit limit. So if your credit card had a spending limit of five thousand, but you only charged one thousand on it, your ratio would be 20%. The lower the percentage, the better.

• Payment history has the biggest impact on your score. Being late on a mortgage payment, or other bills that are more than 90 days late are the most detrimental to your credit.

All of these factors are weighed into your current score. The good news is that at LendScout, regardless of your current standing, we have repair tools and simulators that can help you improve your credit score. So not only can we help you qualify for a home, but we can get you into the best loan program possible.