How your credit score is calculated when buying a home in San Antonio
CATEGORY 1– 35% of your score comes from your payment history- namely negative information such as collection accounts, public records and slow/late payments. This category is obviously the most important as it makes up the largest piece of the pie. We especially like to ephasize the importance of late payments. These we consider to be the biggest credit sins of all because they are easy to show up and can potentially have the greatest negative impact in the shortest period of time.
CATEGORY 2– 30% of your score comes from amounts owed- the big focus should be, where do I stand on my credit card balances? As stated in previous blog posts- the key area to stay within is in the 0-19% tier. This will help you in maximizing your credit score and can potentially help you purchase a home even sooner.
CATEGORY 3– 15% of your score relates to the average age of the file- individuals with accounts that have been open for more than 24 months and in good standing are especially gaining benefit from this category. Obiously those with newer or “thin” credit files will have to do without this initially and focus more on the 30 and 35% categories previously stated.
CATEGORY 4– 10% is new credit/inquiries- every time you pull credit and that credit pull relates to the possibility of adding debt to your personal obligations the bureaus will add that and count that credit pull against you. Obviously this is 10% of the score but it is still good practice to try and avoid applying for credit too many times within a 6 month period. 1 or 2 times is reasonable.
CATEGORY 5– 10% is types of credit in use- the credit scoring system likes to see a healthy mix of different types of credit in use…too much of one category can potentially cause some minor issues but again as previously stated this is another 10% category and does not impact the score nearly as much as the top two categories.
If you are interested in having a FICO Certified Credit Expert review these categories with you personally in regards to your credit file, please click the button below to request a Free Credit Consultation.