A Home Buyer’s Guide to Credit Scores

The better your credit score, the better your mortgage offers will be! It pays to get your credit in the best possible shape before you apply for a mortgage.

Get a free copy of your credit history at annualcreditreport.com. If you see errors, notify the reporting bureau right away. Your credit score is available through MyFico.com; fees apply. Some credit card issuers provide free access to your credit score as part of their services.

There are 3 major credit bureaus and not every creditor reports to all of them. You may have 3 different credit scores as a result. Lenders consider the average of these scores when determining your creditworthiness.

There are several factors considered in your credit score.

They include:

  • Payment history: 35%
  • Amounts owed: 30%
  • Length of credit history: 15%
  • New credit: 10%
  • Credit mix: 10%

Mortgage lenders want to see a history of consecutive, on-time payments. And the less outstanding debt you have, the better! Your debt levels not only affect your credit score, but they also affect your debt-to-income ratio. The more consumer debt you carry, the less room your monthly budget has for a mortgage payment. Ask me for a referral to excellent mortgage lenders!