Moore Mortgage Solutions

    FICO, Fair Isaac, Facto Beacon. Ever wonder what these are? They represent your credit score from the three major credit bureaus, TransUnion, Equifax, and Experian that make up your credit scores.

    Your mortgage interest rate is based on the mid-score of the three of these scores. The higher the score, the better the interest and more flexibility you have in the different programs.

    Knowing how your scores are made up can help you better them.

    Below are the five factors that affect your credit score and how your credit score is calculated:

• Your payment history has the biggest effect on your score at 35%. This tells creditors how you pay your bills. Miss one payment and your score can drop by 50-70 points immediately. Getting those points back can take months.
• 30% of your score goes to the amount of money you owe to your creditors. You can lose 80 points just by maxing out one credit card. Remember what your credit limits are and keep your balances below 30%. In other words, spread the debt around on your cards if you are charging.
• The length of your credit history makes up 15%. If you have credit cards that you opened years ago, keep them open and use them occasionally. If you really don’t need that new credit card don’t apply for it as that can cost you between 2-30 points
• 10% of your score goes to new credit. This number includes recently opened accounts and credit inquires, as well as how often you’ve applied for credit. The good news in this one area is if you are shopping for a car or mortgage and your credit is pulled several times keep the inquiries within a 14 day period. This 14 day period will be changing but unfortunately not all models will be using this right away. So it is best to stay within that 14 day period.
• And the last 10% of your score is based on types of credit. So be picky about who you have credit with. Stay with the major credit cards.

    These models are constantly being tweaked but this will give you a good idea how to better your credit score over time.

    Also it is always a good idea to check your credit yearly for mistakes and especially at least six to twelve months before purchasing a home.

    Until next time, make everyday an inspired one!

Betsy Moore

betsy@mooremortgagesolutions.com