Credit Score Tips for Buying A Home 2019

Mortgage and Lending with Equity Resources NMLS 67179 Licensed in NC

Your credit score is made up of several things. I’m going to give you some examples, based upon the weighted average of how it will impact your score, of things you can do to improve your credit score.  Obviously, my hope is that you will use this information to raise your credit score and buy a house – but the honest truth is that a stronger credit score can also save you money on credit card interest, and insurance!

IN GENERAL, to have access to the best programs, and the best mortgage rates you should have a credit score of at least 640.  Scores below that threshold can qualify for other financing, but there are normally “overlays” meaning you need to show rental history, or have some savings in the bank.  When your credit scores are under 640, then the Banks are looking for a little bit “extra” security.

Credit Score Tips:  Payment History

Obviously, paying your bills on time will impact your credit score.  Did you know that the Payment History section of your credit score accounts for 35% of your credit-score pie? This is where all of your derogatory items hang out.

Here’s a question where you might be able to guess the answer…which derogatory account weighs the most: a judgment, collection, bankruptcy, 150-day late, or a tax lien? Well it’s just another trick question because with such limited information, there is no clear answer.

The real answer is that we are looking at the DLA, or Date of Last Activity.  We need to know that something “bad” happened but you’ve moved beyond it.

Think about it this way, the newer the account date (irrelevant to other factors like the type or balance), the more damaging it will be on the credit report.

For example: your $10,000 judgment that is 3 years old weighs less than your Pizza Hut collection that you just paid off from five years ago for $14. This is due to the fact that your Pizza Hut collection DLA has just been renewed. When you paid off Pizza Hut, you added a new date to that item.  Sometimes our credit score tip is:  you’re better off NOT paying off a collection when it is not going to help the credit score.

The Credit Counselors tell us that if you have a perfect credit score of 850 a single 30-day late can lower your score by 175 points.

Think about it this way; if you were a bank and you had to choose to lend money between one person who had a single 30-day late last month and who, as a result, now has a credit score of 675 versus a different person who went bankrupt 5 years ago who also has a credit score of 675; who would you choose?

Hopefully, you choose the aged, bankrupt client because current risk is much more relevant than any other factor that impacts your credit score.  Sure, the client who went late might have had a brain fart and simply forgot to pay a bill… or they could now be in serious trouble; that doubt is where the real problem lies.

The newer the date of the last negative thing on the report, the more weight that item has.  Believe it or not when you pay off a collection, that that creates a new date for the activity associated with that collection.


Have more questions about your credit score situation and how to buy a house?  Call Steve and Eleanor Thorne at 919 649 5058, and we will be more than glad to go over your unique situation and give you personalized suggestions!

Originaly Posted at NCFHAExpert

Steve and Eleanor Thorne
Advantage Lending, NMLS 60596 - Clayton, NC
Mortgage Loan Johnston County

Great information Eleanor Thorne  - we have a ton of people trying to DIY their Credit Scores...

Aug 05, 2019 08:30 AM
Roy Kelley
Retired - Gaithersburg, MD

This is very good information to share.

Thank you very much for following my blog. Your comments are always welcome.

Aug 05, 2019 10:37 AM
Steve and Eleanor Thorne

It's great information!  I always learn somehing!

Aug 13, 2019 01:37 PM
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good afternoon Eleanor Thorne - this is an important thing for someone who has had bankruptcy and has been good ever since.

Aug 05, 2019 12:59 PM
Steve and Eleanor Thorne

Yes it is! Thanks for stopping by!

Aug 13, 2019 01:37 PM
Debe Maxwell, CRS
Savvy + Company (704) 491-3310 - Charlotte, NC

Great information, Eleanor! I had NO idea a SINGLE 30-day late could cause that much damage to your credit rating. You can't have too many of those before you soon won't be able to buy a home, for sure! 

Aug 10, 2019 11:43 PM
Steve and Eleanor Thorne

You are absolutely right Debe!  It's amazing how quickly a little Boo-Boo can become a hugh headache!

Aug 13, 2019 01:38 PM
Anna "Banana" Kruchten
HomeSmart Real Estate - Phoenix, AZ

Great info Eleanor!  In my mind it's ridiculous that someone with a FICO in the high 800's with perfect credit use for years - that because of a single lapse in mind payment their FICO would drop 150. That's nuts. Perhaps they had a death in the family, a serious illness etc that caused them not to be quite so on top of their financial game. If I were the bank I'd make a loan to both customers if both had a long history of excellent credit use.

Aug 11, 2019 09:25 AM
Steve and Eleanor Thorne

Anna Banana Kruchten CRB, CRS 602-380-4886 we totally agree - however, if you've been sailing along, and only make the one mistake - it recovers pretty quickly (than goodness!)!

Aug 13, 2019 01:39 PM
Jerry Thomas-Construction Loans
Cranbrook Loans - Farmington Hills, MI
Construction Loans in MI, OH, PA, CO VA, GA and FL

Good info but I do question the drop for a single 30-day late. Seems like credit card usage would play a role in this. If a borrower was very low on credit card debt that would seem to be a pretty big drop.

Aug 12, 2019 06:50 PM
Bruce Hicks
Best Homes Hawaii - Honolulu, HI
Your Best Hawaii Realtor!

Wonderful Eleanor Thorne it would seem if there were a 150 drop in a month, then there could be an increase of 150 in a month?

Aug 13, 2019 12:38 AM
Steve and Eleanor Thorne

Yes - if it's just a one time thing - sometimes you can get the company to ammend there records.  Of course that's way too much work for a really big bank to do.

Aug 13, 2019 01:40 PM
Dennis J. Zisa & Associates, Inc.
Dennis J. Zisa & Associates, Inc. - Camden, NJ
31 years in So. Jersey and the Greater Camden area

Great information; I thought I knew tons about credit scores, but I just learned something new!

Aug 13, 2019 04:04 AM
Elizabeth Wicker

This is very well explained! Thank you.

Aug 13, 2019 06:29 AM
Elizabeth Wicker
Keller Williams Central Richardson - Richardson, TX
Bilingual Realtor - Dallas Texas

Very well explained! Thank you. 

Aug 13, 2019 06:50 AM
JoAnn Moore
The Mortgage Market of Delaware - Georgetown, DE
Home Loans in Delaware

Great information. And you explained things very thoroughly. You learn something new everyday. 

Aug 13, 2019 08:41 AM
Carolyn Roland- In Delaware and S. Chester County PA
Independent architectural histor'n - Wilmington, DE
Carolyn Roland, GRI, CRS

Eleanor-I had no idea about how one event could so badly affect  a score!  Thanks for the info!

Aug 13, 2019 11:28 AM
Anne Corbin
Long and Foster - Lake Anna - Spotsylvania, VA
Serving Lake Anna & Central Virginia

Great post. Thanks for sharing this information.

Aug 13, 2019 04:29 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

This is great education and really useful information, Eleanor. I suspect most people have a limited understanding of the many issues that impact credit scores.


Aug 21, 2019 04:32 PM