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Credit Score

Understanding your credit score is a key step to obtaining a good loan and mortgage rate.  Lenders will typically use your credit score to streamline the credit application processing.  The most commonly used system is the FICO credit score (Fair, Isaac and Company.) 

A FICO credit score can range from the 300s to the 900s, with the average credit score in the 600s or 700s.  The higher your credit score, the better loan program you will qualify for.

Here is the breakdown of how your credit score is determined:

  What is involved? % of your FICO credit score
Payment History This credit score is your track record for paying prior loans.  The factors considered are late payments and whether or not the loan has been repayed. 35%
Amounts Owed This number takes into consideration how many loans you have and what total dollar value you owe.  (Having a very small balance without missing a payment is often better than having a zero balance.) 30%
Length of Credit History Your credit score takes into account how long your accounts have been established and how long since you have used certain accounts. 15%
New Credit This credit score takes into consideration how many new accounts you have, how long it has been since you opened an account and the recent requests that have been made to receive your credit score. 10%
Type of Credit Use This credit score considers your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. 10%


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