Five Categories that Determine Your Credit Score
Want to buy a house, but you’re not sure if your credit score is high enough? Understanding credit can be confusing, but INHP can help.
How credit scores work:
If you’ve ever used a credit card or had a car loan, you have a credit history – a borrowing and repayment record that lets businesses know how well you manage money and pay bills. Most people have credit information at each of the three major credit bureaus: TransUnion, Equifax and Experian. Credit scores are often called “FICO” scores because they are produced from software developed by Fair, Isaac and Company. All credit bureaus see similar, but not the same, data; that’s why each credit bureau may have a different score.
Categories that determine Credit or FICO score (and how important each are toward your score):
- Your payment history (35%): Whether you’ve made payments on time and if they’re paid in full.
- Your current total debt (30%): How much open credit you have vs. how much money you owe.
- How long you’ve had credit accounts open (15%): Usually, the longer lines of credit are open, the better it is for your score.
- What kind of debt accounts you have (10%): Ideally, it is a mix of different types of credit – such as student loans, car loans and credit cards – and not all store credit cards.
- Request for new credit (10%): How many times you’ve applied for a credit card or loan.
Want more information about credit and credit scores? INHP’s Understanding Credit class provides the steps needed to improve your credit score to qualify for a mortgage.
Think your credit score is high enough to qualify to buy a home? If you finance your home with INHP, you could qualify for thousands of dollars in down payment assistance. Get started here!
