Your credit score is a critical determining factor...
In your ability to secure a home loan. While almost everyone worries about this important number, few prospective home buyers understand all of the criteria that are applied to calculate your score.
Developed in 1956, a Fair Isaac Corporation Score (typically known as a FICO score), is a three-digit number that ranges from 300 to 850 and is calculated according to risk factors.
Making The Grade
Your credit is applied by most lenders to a grading system that typically categorizes you for the type of home loan for which you will qualify. Similar to the grades you received throughout your scholastic career, here is a general grading system based on your credit score.
Credit Score Report Card
A+ = 670 and above
A = 650 - 669
B = 620 - 649
C = 580 - 619
D = 550 - 579
F = 520 or below
How Your Credit Score Is Calculated
Payment History - 35% of your score
- Payment information on your loans, credit cards, and other types of accounts
- Public record and collection items
- Details on late or missing items
Amount Owed - 30% of your score
- Amount collectively owed on all accounts
- Amount owed on different accounts
- Whether you are showing a balance on certain types of accounts
- How much of your total credit lines are used.
- How much of installment loan accounts is still owed
Length of Credit History - 15% of your score
- How long your overall credit accounts have been established
- How long it has been since you accessed certain accounts
New Credit & Inquiries - 10% of your score
- How many accounts you have
- How long it has been since you opened a new account
- How many recent requests for credit you have made