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credit score

When applying for a home loan, one of the key factors that will determine the amount you can afford to borrow will be your credit. Your FICO® score (Fair Isaac Corporation Score) represents your credit history in one number. Credit scores range from 300 to 850. Your credit score impacts the loan terms for which you qualify as well as the interest rates you receive.

There are multiple factors that make up a credit score. Payment history makes up around 35% of a credit score; making payments on time versus making late payments can have a great impact on your credit score. Outstanding balances on credit cards and loans will make up close to 30% of a credit score. Keeping balances low and not over-extending yourself will potentially help raise your credit score.

Mortgage lenders will also consider your length of credit history. This shows how long you have established credit and the history of when it was opened. There are generally two types of credit – installment and revolving. Installment refers to loans that have a beginning and an end, such as a mortgage loan, auto loan and student loan. Revolving credit is a line of credit that does not have an end date and remains open, such as a credit card.

Keeping up with your credit score is more important now than ever. Maintaining good credit will help you get better interest rates, not just for a home loan but also for credit cards, car loans and personal loans. The best way to keep good credit is to be knowledgeable about your credit and know your credit score. It’s a good idea to check your credit score at least once a year.

Check for errors and duplications, and ensure your personal information is correct and accurate. Paying bills on time is also very important; making on-time payments, even if it is the minimum payment, will help keep your credit score high. Try to keep balances on credit cards below 70% of the maximum credit line; this will potentially help raise your credit score.

Your credit scores are reported by the three credit bureaus – TransUnion, Experian and Equifax. Each of the bureaus receives credit reporting information from furnishers to generate a score. You can order a free credit report every year from each of the three bureaus from the website or call 877-322-8228.

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All loans subject to credit approval. Rates and fees subject to change. Mortgage financing provided by PrimeLending, a PlainsCapital Company (NMLS: 13649). Equal Housing Lender. © 2014 PrimeLending, a PlainsCapital Company. For full licensing and disclosure information, visit
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