5 Factors That Decide Your Credit Score
Credit scores range between 200 and 800. Scores above 620 are considered desirable for obtaining a conventional mortgage. These factors will affect your score.
- Your payment history. Whether you paid credit card obligations on time.
- How much you owe. Owing a great deal of money on numerous accounts can indicate that you are overextended.
- The length of your credit history. In general, the longer the better.
- How much new credit you have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay promptly.
- The types of credit you use. Generally, it’s desirable to have more than one type of credit—installment loans, credit cards, and a mortgage, for example.
For more information on evaluating and understanding your credit score, go to http://www.myfico.com.
For credit scores below 620 - you may consider an FHA loan. FHA policy requires a minimum FICO score of 580 for a 3.5 percent down payment. With a credit score between 500 and 580 the down payment must be 10 percent.
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