There are at least 5 key components that make up a homeowner’s final score. There are important factors a homeowner needs to learn especially if they need to improve their credit score. Your credit score are not just a random raffle of numbers or based on how big your income is.
The record of timely payment on loans. This makes up 35% of your credit score. This is basically the history of your payment that is made up of all your payments on things like credit cards, utility bills, car loans, etc.
The types of debts and the total outstanding balance composes 30% of your credit score. Another way to understand this component is to answer the question, how much credit you use. If you have a $15,000 credit limit on your credit card, do you use it every month or charge only thousands on it. Experts recommend that you only use 30% of your available credit to maximize credit score.
The length of credit history is 15% of your credit score. Credit bureaus are looking at the overall age and length of time that you have been in their system. Take note that a great payment history doesn’t mean a whole lot, if the history only spans a six month period. This credit history includes things like credit cards, mortgages, auto loans, etc.
Types of credit used/The mix of credit accounts is just 10% of your credit score. This establishes the borrower’s ‘financial experience’ with different types of credit especially if they had success in managing a mortgage, credit, and other types of loans.
Applications for new credit/Number and types of accounts opened recently, also 10% of your credit score.
Understanding of credit score and credit report will guide a borrower to make better financial decisions in his future Homes Listings in Arvada CO. To make sure that you always fall on having an excellent credit score, pay on time and limit the amount of credit you use at one time.
If you have plans in buying a property at Potomac Real Estate, know your credit score first. Knowing what your credit score means puts you in the advantage position and allows you to make better decisions whether to pursue your dream of buying Homes for Sale in Richmond Virginia or wait to build your credit score higher.
