Whether you’re looking to get a new mortgage or refinance an existing one, your credit score is one of the biggest financial factors in this world. A high credit score will help you get the best mortgage rate available and qualify for many special programs, while a low score may prohibit you from qualifying for your desired mortgage type.
At City Creek Mortgage, we’re here to help. We have a variety of loan programs for people with varying credit score ranges, and we also offer many tips to our clients for improving their score. One thing we often find helpful? Knowing how the various credit bureaus weight important factors in your score. Here are the five primary areas they inspect.
Payment History (35 percent weight)
Your history of paying off previous credit is the single most important factor in your credit score and how it changes. Things like late payments or past due charges are a big negative here, so try to avoid these at all costs.
Utilization Rate (30 percent weight)
Simply put, your credit utilization rate describes the amount you owe on all your credit accounts compared to your total credit limit. In general, it’s best to never go over 30 percent of your available credit in use – anything below this can start dropping your score.
Length of History (15 percent weight)
Not only is your payment history important, the length of time you’ve had accounts open also plays a role. Your history of payments might be great, but if it’s limited in its scope, banks still have to assume some risk.
Inquiries (10 percent weight)
This refers to any attempts you make to open new credit accounts or make credit inquiries. In some cases, opening too many new accounts in a short period of time will be viewed as a credit red flag meant to artificially inflate your utilization rate.
Types of Credit Used (10 percent weight)
How many accounts do you have open? Are you using options like revolving cards or installment plans? These will factor in as well.
For more on how credit bureaus weight your score, or to learn about any of our mortgage loan options, speak to the pros at City Creek Mortgage today.