Credit scores explained for first time home buyers
Thinking of buying real estate? First time home buyers have concerns about their credit score...WHat will the lender find when they run the credit report? What really determines your credit score?
Hope this helps....
35% PAYMENT HISTORY The largest factor is your basic payment history. This is the number of unpaid bills that you have, any bills sent to collection, bankruptcies, etc. The items that are most recent have the most impact.
30% AMOUNTS OWED Are your credit cards maxed out? High balances, or balances close to your credit limit can negatively affect your score. Keep balances below 35% of your credit limit.
15% LENGTH OF CREDIT HISTORY How long have your accounts been open? The longer the account has been open, the better.
10% RECENT INQUIRIES Every time you apply for credit of any kind, you create an inquiry on your credit report. Multiple inquiries negatively affect your score.
10% CREDIT DIVERSITY There are 3 accounts types that can be listed on your report. They are mortgage, installment, and revolving accounts. The more diverse your accounts, the higher your scores.
Information courtesy Michael Lamborn - Guaranteed Rate Affinity
To know how to maintain or improve your credit score...check my article on the Do's and Don'ts
For more tips or a personal consultation for your Real Estate needs, call 484 947 3127.
Bela Vora, R3ALTOR
Coldwell Banker Realty