Credit Scoring - What Makes Up My Credit Score? (1 of 6)

Real Estate Agent with KW Hometown 1756879

I've worked with clients all across the board.  Some who had "perfect" credit, and some who upon seeing their credit report, found themselves a second job (fixing their credit).  I'll help you understand what makes up a great credit score, and how to alter any situation to improve the credit pie chart

Let's lay some ground-work. 

Three bureaus evaluate your credit scores

  1. Equifax
  2. Trans Union
  3. Experian

Credit scores will be different among the three bureaus because not all creditors report your data to all three bureaus.  Even if your data was reported exactly the same to each, the three credit bureaus don't use the same model to evaluate your score.  Typically your three scores range within 50-60 points from high to low.  On some occasions you will see a score drastically higher or lower than the other two.  For this reason, many creditors will pull all three scores and use your middle score for qualifying purposes. The middle score is assumed throughout these articles when we talk about one's credit score

Credit scores range from 350 - 850.  The higher the score the better.  What is a great credit score?  In today's market you want to have a 720 or better.  Even higher is better for qualifying purposes, although it probably won't get you a better rate.

"Good" Credit Scores.  You can still finance a home with a lower score, but it becomes more expensive either by way of a higher interest rate, or by way of higher fees (usually points*).  Stepping down from that 720 score, you will experience what is call Risked Base Pricing.  Each 20 points lower could cost you in rate or fees. Today Fannie Mae, Freddie Mac, and FHA all have some form of risked base pricing.  So literally one point in your credit score could be a huge savings to you.

credit pic"Poor" or Low Credit Scores.  Your options shrink real fast as you dip below 580.  Although many mortgage guidelines allow for scores below 580, many lenders/investors (as of this writing, 10/22/08) incorporate their own guidelines on top of these main guidelines. So in some instances, going to another lender that offers the same type of loan, for instance an FHA loan, may allow you to finance your purchase or refinance instead of being denied.

Now that we have a basic knowledge of credit scoring, look out for the next part of this series, Credit Scoring - Payment History (2 of 6) where we will start to talk about the reasons scores are what they are, and how to get your credit score higher and keep it there.

For questions or a personal credit review, contact Steve Kappre at  856.419.3561 or at

* A point is equal to 1% of the loan amount. i.e. One point on a $100,000 loan is $1,000. 

Credit Scoring – What Makes Up My Credit Score? (1 of 6)

Credit Scoring – Payment History (2 of 6)

Credit Scoring – Balances (3 of 6)

Credit Scoring – History (4 of 6)



Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Julie Staradumsky 10/30/2008 02:33 AM
  2. Diane Bell, Hilton Head Real Estate, Bluffton 01/30/2009 11:08 AM
  3. Josh Campbell 06/20/2009 07:44 AM
Lending / Financial
New Jersey Gloucester County
Delaware Valley Region
New Jersey & Pennsylvania -- Realtors/Loan Officers/Title Clerks/Real Estate Lawyers
New Jersey Real Estate Experts
Gloucester County, NJ
credit repair

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Paddy (Patricia) Pizappi
Better Homes and Gardens Rand Realty - Pine Bush, NY
Real Estate Associate Broker Hudson Valley NY

Great explanation Steve.  Can't wait for the rest of "the story".  Thanks.

Oct 22, 2008 10:23 PM #1
Russel Ray, San Diego Business & Marketing Consultant & Photographer
Russel Ray - San Diego State University, CA

I found part 2 of 6 so informative that I had to come over here and read part 1 of 6. Looking for ward to the remaining parts.

Oct 24, 2008 05:48 AM #2
Stephen Kappre
KW Hometown - Mantua, NJ
Helping You Home

Russel - that makes me very happy to hear. Part 3 should be coming fairly soon. As always, just shoot me an email or post if you have any questions. 

Oct 24, 2008 05:55 AM #3

Steve, great work on this.  I use to run the consumer FICO business at Fair Isaac so I appreciate it when someone is doing a great job of educating.  BTW, I have a credit education site called where I have over 80 video posts on various credit score related topics.  All activerain users can take my videos and embed them into posts quite easily.

For your balances post check out these tips:

Tips for Full Balance Payers

Can I Setup AutoPay for Credit Cards?

Are credit limits being lowered?



Oct 30, 2008 04:32 AM #4
Marie Ogle
Mortgage Processing Solutions - Spokane, WA
Contract Mortgage Processor

Thanks for the indepth look at what is really behind the "score"  am going to read the other posts right now.

Jan 27, 2009 04:41 AM #5
Stephen Kappre
KW Hometown - Mantua, NJ
Helping You Home

Marie - I'm glad you enjoyed - just email, text, or call me if you have any questions that are unanswered :)

Jan 27, 2009 04:44 AM #6
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