What affects your credit score? Here is the breakdown.....

By
Education & Training with Network Funding LP NMLS #116235
WHAT AFFECTS YOUR CREDIT SCORE?

Credit scores are an important factor in mortgage loans but many consumers are unsure about what causes them to receive that score. The typical score model for mortgages are FICO Scores. They are determined by five main categories:

35% is based on your payment history. (Including all accounts)

30% is based on the amount you owe creditors. (Especially revolving accounts with high balances)

15% is based on how long you have been using credit. (The longer you have a good payment history, the better)

10% is based on your applications for new credit.  (If you are loading up on credit it may damage your score)

10% is based on your ‘mix' of credit. (Numerous finance company accounts may lower your score)

The data used to compile credit scores is based on information reported by creditors to Equifax, Experian, and Transunion. It does not include information about income, race, sex, or religion. There are key factors to maintaining a good FICO Score:

  • Pay your bills on time. (Even one late in the past 12 months can do significant damage)
  • Keep balances low on revolving accounts. (Accounts with balances over 30% of the credit limit may lower your score)
  • Avoid frequent balance transfers. (Numerous credit applications or balance transfers may lower your score)
  • Review your credit file at least once per year (This enables you to determine any errors or potential fraud)

If you feel there is an error on your file, contact the creditor in question and request an investigation. You should also dispute the item with the bureaus at the addresses below:

     EQUIFAX - PO BOX 105873 ATLANTA, GA 30348

     TRANSUNION - PO BOX 1000 CHESTER, PA 19022

     EXPERIAN - PO BOX 2104 ALLEN, TX 75013

Comments (3)

Fran Gaspari
Patriot Land Transfer, Inc. - Limerick, PA
"The Title Man" - Title Insurance - PA & NJ

Jason,

Thanks for a nice clear explanation. Thanks,   Fran

Oct 01, 2007 02:29 PM
Eric Bouler
Gardner Realtors, Licensed in La. - New Orleans, LA
Listening to your Needs
Nice explanation of the credit score.
Oct 01, 2007 02:30 PM
Barb Merrill
Cactus Mountain Properties, LLC - Tempe, AZ
GRI, Associate Broker
Educating people is key. Our kids need to learn the financial golden rules of credit to help them get off on the right foot and build a solid credit foundation. I see to many young people who have messed up there credit by just a few hundred dollars in credit card charge-off's that have prevented them for qualifying for a home when they are ready to start a family. Thank you for your clear explanation.
Oct 01, 2007 02:56 PM

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?