In any home loan situation, one of the most important factors that will go toward you getting the best mortgage rate possible will be your credit score. This is a measure that determines your creditworthiness in the eyes of the larger credit bureaus, and it will often heavily impact the kinds of loans you’ll be approved for and the rates you’ll get within these.
At Mortgage Ogden, we’ve got options available for all levels of credit score – but the higher it is, the wider your net can be. Here are some of the key factors that go into credit score calculation.
Having credit available is one thing, but using it regularly and paying it back in the proper formats is what credit bureaus really want to see. Their primary tracker here is card utilization rate, or a ratio that compares available credit to credit being used. This is simple division – your open credit divided by your total credit limit. If this rate is too low, your credit will drop.
The longer your credit history, the more comfortable bureaus are with your ability to repay the debt you utilize. Never close out any of your older credit cards near a time when you might need a credit score, such as near a mortgage or other large loan – average account age is one of the top metrics used here, and closing an old account will lower it.
Down similar lines, the bureaus want to see active accounts that are making regular payments. If this is more than one, all the better. However, know that in the grand scheme, this is one of the smaller factors – don’t go around opening up several new accounts just for this, in other words.
Late payments are one of the fastest ways to lower your credit score, and they’re so unnecessary in today’s day and age with automatic payments available online. Bureaus have specific trackers for payment timing, and if too high a percentage of yours are late, you’ll take a hit on your score.
These are the worst-case scenarios for credit score, featuring negative events like foreclosure, or liens. These events will often take years or even decades to fully wipe from your credit score.
For more information on credit score or any of our mortgage services, speak to the experts at Mortgage Ogden today.