Credit scores range from 300 to a perfect 850, and are based on information the credit bureaus receive about you from credit cards and any others you’ve ‘borrowed’ from in the past including automotive, student and other types of lenders. This information may include your payment history, the length of your credit history (in years), the kinds of credit you have and amounts owed. The higher your score is, the better.
Your credit score is based on five key financial criteria:
- Payment History: About 35% of your credit score is based on your bill payment history.
- Amounts Owed: About 30% of your score is based on the amount of money you currently owe.
- Length of Credit History: About 15% of your score is based on how long you’ve been taking on bills – and paying them.
- How Much Credit?: About 10% of your score is based on new credit activity.
- Types of Credit: About 10% of your score is based on the kinds of credit you have, e.g., car payments, mortgage payments, credit card bills, school loans and the like.
What to Do If You Have Less Than Stellar Credit
While credit has tightened since 2008, home buyers with less than stellar credit still have options. Additionally, there are a number of loan products available for low- to moderate-income buyers. Visit with your loan officer to learn about what options are available to you.