How do lenders measure your credit worthiness?

Most of us understand that establishing and maintaining good credit is important.  Beacon scores or Fico scores, as they are sometimes referred to, are generated based on many factors but the main things that influence your score are:

-number of years you have had credit (the longer the better).

-your repayment history (missing payments will hurt your score).

-the type of credit you have opened (term loan, revolving line of credit, credit card or finance company purchases).

-your balance in proportion to your available limit (don’t go over 70% of your limit).

-credit utilization overall (how much of your available credit have you used up).

-number of recent inquiries on your credit (make sure you don’t apply for too much credit).

-inquiries by finance companies (hard and soft inquiries….there is a difference).

-change in address (if you move frequently, this can affect your score negatively).

All these things affect your credit score.  Wondering what a good credit score is?  A great score is anything above 700.  Most mortgage lenders would agree and this would qualify you for any mortgage product   (recently, one lender came out with a 720 minimum score for a certain product).   Some mortgage products require a 680 minimum score and generally speaking, 650 and above is good…  620 and below is weak…and 580 and below is poor.

You can obtain your own personal credit report from Equifax to find out what your score is and it does not count against you… it will not show up as an inquiry on your report…there is a small cost for this….  let me know if you need more info…

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