DO YOU KNOW WHAT FACTORS MAKE UP YOUR CREDIT SCORE?  

How did I get the score I have?  FICO stand for Fair Isaac Corporation, the first company to offer a credit-risk model with a score.  No, 'Fair Isaac' isn't the one who judges you, Bill Fair and Earl Isaac are the founders.

Scores fall between 300 and 850, and 700 or higher are recognized by most leaders as an indicator of financial health.  90% of the largest U.S. Financial institutions use FICO scores to make credit decisions.  Experian data shows that only 25% of Americans have a "very good" score ranging from 740 to 800, while 16% have a "very poor" score that ranges from 300 to 579.

FICO determines each credit score based on five factors weighted as percentages:

1. YOUR PAYMENT HISTORY (35 PERCENT)

How consistently are you making payments? That’s what counts the most. Late payments on all your previous and current credit accounts lower your score, so be sure to always pay on time.

2. HOW MUCH YOU OWE (30 PERCENT)

Next up, your balance-to-limit ratio: How much do you presently owe on all of your open accounts? How many balances do you have? How much available credit are you using? The goal here is to lower the percentage of your total credit limit that you still owe, typically aiming to keep card balances to less than 30 percent of their limit.

3. LENGTH OF CREDIT HISTORY (15 PERCENT)

The longer you’ve had active credit and made timely payments, the better your score will be. There’s not much you can do now to change how long you’ve had credit, but you can focus on being as responsible as possible with the way you currently manage your money.

4. NEW CREDIT (10 PERCENT)

Whenever you open a new line of credit, an inquiry is performed that negatively affects your score. The only exception is when you’re shopping for a home: All mortgage inquiries within a 30-day period count as a single pull. To maximize your score, minimize hard inquiries.

5. OTHER FACTORS (10 PERCENT)

Miscellaneous items can also have a minor influence on your score, i.e., using a variety of credit types like home and auto loans, cards, and personal lines of credit. It’s probably not a good idea to open a lot of new accounts just for this reason — because of the new credit penalty. But if you already have a diverse history, you’ll probably have a higher score than if you didn’t.

If you want to know your credit score, you can go to online sources such as AnnualCreditReport.com to request an updated report from all three reporting companies once a year, or you can contact each of the three bureaus directly;  Equifax, Experian and TransUnion.

If you are ready to buy a home and don't know where your credit stands, contact the best mortgage loan officer on the planet, Scott Cummins @ Cornerstone Home Lending.  (www.TeamCummins.com)  Scott would love to explain the mortgage process, and if your credit is not quite there, they have a tools that can give you the steps needed to increase your score.  Trust us, this process is not as scary as it sounds.

The advantages to owning a home are numerous... and YOU can own a home more easily that you think.  There are even programs that offer down payment assistance.  A BIG SHOUT OUT to Cornerstone Home Lending, and www.houseloanblog.net for this amazing information.  This blog site is great.... tons of useful information can be found here! 

Want to know about housing marketing and get daily emails on homes available RIGHT NOW?  Email PhillipsRealty@outlook.com, or call our office directly at (210) 571-0330.  Our information pulls directly from the local board in real-time, so you will know you are getting the most accurate and up-to-date information available.