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Lately I've been getting a lot of questions from clients in regards to how they can improve their credit score. First, I'll explain what a credit score is, and then I'll tell you steps that you can take to improve it so that you can get approved to buy a home.
What is a credit score?
- After researching and asking lending experts about this, I have some percentages that will make up the body of your score.
- 35% of your credit score comes from your payment history. Lenders want to know how well you've been paying back loans and how quickly you've done this.
- 30% is determined by how much you owe. They look at your credit limit, and how much you owe towards that credit limit to determine if you're a responsible lender right now and if you would be in the future.
- 15% of the score is calculated by how long you have had credit open and also how well you were able to pay back that credit.
- 10% of your score is related to how your current credit is in use. Are you paying off bank loans or buying accessories at Macy's? All of this will count towards your credit score, so be sure to use your credit wisely.
- 10% of your score is gauged by the new credit you're applying for. Lenders will want to see how many accounts you're looking to open and if that would be a great risk for them. They want to make sure you're not opening up credit cards that you cannot pay for.
You can call me at (626) 643-0723 or email me at CC@CCandCO.net
