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While your credit score might not be an everyday worry, it quickly becomes one when you’re trying to get financing, especially a mortgage.

These three-digit numbers follow you around and let lenders know how trustworthy you are when it comes to managing your finances. Learn a little bit more about your credit score before you apply for a loan. 

  1. How is it Calculated? While there are some questions always left unanswered when it comes to how your score is calculated, these are generally the most accepted methods. 
    1. How you pay your bills. 35% of your score is based on your bill payment history. So, if you’re always prompt about paying, this is an easy booster for you. If you sometimes pay late, you might want to start correcting your behavior now before it comes back to haunt you.
    2. The ratio you owe. 30% is based on the ratio of how much money you make vs. how much you owe. The less you owe, the better. 
    3. Length of History. 15% is based on how many years creditors can go back to look at your credit history. When did you open your first account? Is it still open? Are you current on that account? The longer they can go back and look at your history, the more comfortable creditors feel about lending you funds. 
    4. Type of Credit. 10% is based on what kinds of revolving credit you have on your report. Are they big ones like school loans, and car loans or are they mostly credit cards. Your credit score is usually better with a variety.
    5. New applications. The last 10% is dependent on new applications to your credit report. When purchasing a home, lenders don’t want to see a bunch of new accounts. It makes them nervous that you’re overextending yourself. If you can hold off on opening new accounts until after you close your mortgage, it is better for your credit score.  
  2. Where to find it? Now that you know how it is calculated, where can you find it? You can view your credit for free once a year using When you get your score, you should also review your report to make sure there are no unrecognizable accounts. Those could be fraudulent, and you’ll want to contact the company and get it closed immediately!
  3. What does it mean? Now that you have your score, you can figure out where you sit. The scores range from 300 to 850. The higher the score, the better rate, and terms you’ll be able to get on your loans. 800 or above will get you the best interest rates (lowest) saving you lots of money over time. 

Having a solid credit score is one of the best things you can do for yourself when looking to purchase a home. If you’re not in a good place now, don’t worry. You can start changing your purchasing habits and increase your credit score to get you in a better place. Knowing where you start is the best way to get to where you want to go. If you’re looking for a new home, contact any of our agents today