Understanding Your Credit


How Your Scores Are Calculated

The all-important credit score - know exactly where you stand.

Credit scores range anywhere from 350-850. The higher the better. Your number is determined by five factors combined to calculate your personal score. Even if your score is lower than desired, don’t give up. With a little clarity and focus, a lot can be done to make things better.

Types of Credit - 10%:
This looks at what types of credit you have.

New Credit - 10%:
New applications for credit might cause you to be risky and lower your score.

Length of History - 15%:
How long your accounts have been open. If you are going to close an account, DO NOT close the oldest.


Payment History - 35%:
Making sure that you have your payments in full and on time.

Debt Utilization - 30%:
How active EACH of your accounts are will affect this portion of your score.

Do's and dont's

How to handle your credit during the mortgage process.


  • Immediately inform your Loan Officer if there are any changes in your employment, income, or assets.

  • Continue living in your current residence.

  • Continue making all mortgage or rent payments.

  • Continue to make payments and stay current on all existing credit accounts.

  • Be prepared with an explanation for any credit “blemishes” and recent credit inquiries.

  • Research and select a preferred homeowner’s insurance provider.


  • Make any major purchases or home improvements.
    (ie. auto, boat, appliances, furniture, pool)

  • Apply for new credit or loans.

  • Pay off any charge-off accounts, collections, loans, credit cards, or consolidate debt.

  • Close any credit card accounts, max-out, or over-charge credit accounts.

  • Change bank accounts of transfer balances from one account to another.

  • Change the source of your “closing funds.”

  • Deposit large amounts of cash into your own bank account without proper documentation.

The Dispute Process

How to dispute an inaccurate account through each credit reporting agency.


Credit FAQ's

Why should I care what is in my credit profile?

It is your credit report that creditors use to determine if they will extend credit to you. If you have inaccurate information on your report, you may be turned down for the loan you need or pay unnecessarily high interest rates. Employers are now also inquiring into applicants credit and it could affect their hiring decision.

Am I able to find out my credit scores / review my credit profile?

Yes, you can obtain a free copy of your credit report by going to AnnualCreditReport.com. This site is an initiative mandating that the 3 major credit reporting agencies allow consumers free access to their credit report once every 12 months. I accentuate the word "free" here because there are several other websites with similar names which are not free at all.
I highly recommend that you take advantage of AnnualCreditReport.com every year as one additional step in protecting yourself from identity theft and to make sure your credit is in good order for the next time you apply for a credit card, mortgage loan, or car loan.

Who are the main credit reporting agencies?

Experian, Equifax, and Transunion.

How does information about me get into my credit report?

When you agree to accept credit from a bank, most retail stores, etc., or fill out an employment application - if a credit report is used as a background check - you give the creditor the right to provide information to any credit reporting company. Additional information about you comes from public records, such as court records, debt collection companies, and even the utility companies.

Will checking my credit report hurt my credit score?

No. When you check your own credit report through a service that sells credit reports directly to consumers, you create what is called a “soft inquiry.” These inquiries are listed when you review your own credit report, but they are not shown to creditors and do not affect your score. You can pull a free copy of your credit report annually from each of the three credit reporting agencies or get a copy from AnnualCreditReport.com.

How many points does an inquiry take off your credit report?

There is no set number of points that will be deducted from your score for a single inquiry. The same inquiry from the same lender at the same minute can affect two people’s credit reports differently. In general, inquiries are a small part of your credit score (less than 5%), and the stronger your score, the less likely one or two inquiries are to have an effect on your score. Nevertheless, be very careful about applying for new credit, a cell phone, insurance, or anything that might result in a credit check if you are in the process of getting a mortgage. Sometimes a score drop of just a few points can drop your score below the range for the rate you are trying to get.

Does paying a past due debt remove the debt from your credit report?

Paying an old debt does not erase the fact that at one time you were not paying it as you agreed, but it is possible to update your payment history.

A debt collector has contacted me about an old debt. Do I have to pay it?

Maybe; maybe not. Every state has a statute of limitations, which governs how long the creditor or collector has to sue you. If this debt is too old, and they try to sue you to collect, you can raise the statute of limitations as a defense. That means they don’t have much leverage in terms of forcing you to pay. And that gives you more leverage to negotiate a settlement — or just to tell them to leave you alone. For more information, and to fully understand your rights, check with your state attorney general’s office or a local consumer attorney. If the debt is too old, you can simply write to the collection agency, indicate that you believe the debt is outside the statute of limitations, and instruct it to stop contacting you. Send your letter via certified mail and keep a copy for your records. If you are worried about your credit report, keep in mind that collection items may only be reported for up to 7 1/2 years from the date you fell behind with the original lender, regardless of whether they are paid or not.

I co-signed an auto loan for my daughter. When I tried to refinance my mortgage, I found out she has been paying it late, and it has hurt my credit score. What can I do to get that information removed?

Sorry, you’re likely out of luck. If there is one piece of advice we can give about co-signing, it is this: don’t do it. When you co-sign, you are agreeing to be fully responsible for the debt. And by law, if the issuer reports debts to a credit-reporting agency, it must report that information under the co-signer’s name as well as the primary account holder’s. That said, the lender might be willing to remove those late payments if you will bring the account up to date and/or pay it off. If it does agree to “re-age” the account, get it in writing. Of course, by contacting the lender, you may find that you are inviting the creditor to contact you if your daughter gets behind again, whether or not your credit report is cleared. After all, you are the co-signer.

Who will remove items from my credit report?

Only the credit reporting agencies have the power to remove items from your credit report. But, as required by law, the credit reporting agencies must correct or remove inaccurate, erroneous, or obsolete information.