5 Factors That Decide Your Credit Score
If you are considering buying a home within Leelanau County or the Traverse City area in the next couple years you need to start thinking about your credit score! Your credit score will impact the interest rate that you will receive on your loan!
Credit scores range between 300 and 850, with scores above 620 considered desirable for obtaining a mortgage. 723 is the median score in the U.S., but you can expect good mortgage interest rates at the 720 to 760 level and up.The following factors affect your score:
1. Your payment history. Did you pay your credit card obligations on time? If they were late, then how late? Bankruptcy filing, liens, and collection activity also impact your history.
2. How much you owe. If you owe a great deal of money on numerous accounts, it can indicate that you are overextended. However, it’s a good thing if you have a good proportion of balances to total credit limits.
3. The length of your credit history. In general, the longer you have had accounts opened, the better. The average consumer's oldest obligation is 14 years old, indicating that he or she has been managing credit for some time, according to Fair Isaac Corp., and only one in 20 consumers have credit histories shorter than 2 years.
4. How much new credit you have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay them promptly.
5. The types of credit you use. Generally, it’s desirable to have more than one type of credit — installment loans, credit cards, and a mortgage, for example.
For more on evaluating and understanding your credit score, visit www.myfico.com.
Leelanau County & Traverse City Real Estate