For most people, a home is the biggest purchase you’ll ever make. When determining your credit worthiness, the lender will consider your financial history. To do that, they’ll be looking at your FICO score. Here’s what makes up your FICO score:
- 35% of your score is determined by your payment history. This includes everything from credit cards to retail accounts, as well as public records like bankruptcy.
- 30% of your score is determined by your amounts owed. This isn’t just how much you owe, but what types of accounts and what percentage of available credit you’re using.
- 15% of your score is determined by the length of your credit history: How long your accounts have been open, and what kind of activity they’ve seen.
- 10% of your score is determined by your new credit. This just means what recent new accounts you’ve opened, and how long it’s been since previous credit inquiries.
- 10% of your score is determined by the types of credit used. This show the lender what proportion of your credit is from credit cards, installment loans, mortgages, etc.
Having a great FICO score is imperative for getting a great rate on your mortgage loan — and for getting a mortgage loan at all. Still not sure about how your financial history will feature in your search for the perfect home?
This information was provided by one of our preferred vendors, Supreme Lending. Thank you, Cale Iorg, Senior Loan Officer NMLS# 1121662, for this information.