Understanding Your Credit

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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.

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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.

Do's

  • 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.

Dont's

  • 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.