Your Credit Score

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Your credit score

Knowing your credit score is one of the first and most important steps when it comes to buying a house. A good credit score is even more important.


What is a credit score?

According to Wikipedia, a credit score is a numerical expression based on a level analysis of a person's credit files, to represent the creditworthiness of the person. A credit score is primarily based on a credit report information typically sourced from credit bureaus.

Basically, your credit score is a number ranging from 0-850 that gives home loaners, creditors, landlords, etc. a way of knowing how reliable and likely you are to make your payments on time. This number is based on many different factors that we will go over below.


Checking your credit score

Below are different ways for you to check your credit score:

  • AnnualCreditReport.com - Free credit report once a year that gives you scores from all 3 credit bureaus.
  • MyFICO.com - Purchase a credit report at any time
  • CreditKarma.com - Free credit report at any time. However, this website only pulls information from 2 or the 3 bureaus so your actual credit score may differ from what Credit Karma says.
  • Third parties such as credit card companies, banks, and insurance providers usually offer credit monitoring services.


Credit Score Ratings

  • Excellent Credit: 781 – 850
  • Good Credit: 661-780
  • Fair Credit: 601-660
  • Poor Credit: 501-600
  • Bad Credit: below 500


Acceptable scores

Obviously a higher score is better but we can't all be perfect. An acceptable score varies from lender to lender and is based on things such as your salary, your available credit, and scores that other lenders are accepting. However, applicants are now required to have a minimum FICO score of 580-620, depending on which lender you choose.


How to Improve your Credit Score

  • Pay off or reduce debt
  • Make payments on time
  • Do not let things go into collections
  • Keep credit balances as low as possible


To get an idea of which will affect you the most, here is how your score is rated:

  • 35%: Payment history: How often do you make payments on time?
  • 30%: Debt Burden: How much do you already owe?
  • 15%: Length of credit history aka Time in File: Have you successfully managed a line of credit or a loan for a decent amount of time?
  • 10%: Types of credit used:
  • 10%: Recent searches for credit: Applying for credit cards, loans, or to rent, can put hard inquires in your account which will lower your score. Apply carefully.