A Closer Look at Credit Scores and Reports

Credit Score

A credit score is a number between 300 and 850 that provides a snapshot of a person’s credit health. Average scores fall in the 600-750 range, according to Experian, but you need a score of 700 or higher for your credit to be considered “good.” Here’s what factors into your credit score:

• Total debts, including credit card balances, student loans, and auto loans
• Payment history: failing to make minimum payments on time will lower your score
• How long you’ve used credit
• Utilization: aim to keep balances low relative to your credit limit
• How often you apply for new credit

Credit Report

A credit report offers a more detailed look at your financial health over your lifetime. Lenders will evaluate the following information to determine your eligibility for a mortgage:

• Debts (credit cards, car loans, student loans, etc.) and payment history
• Credit inquiries: how many times your credit report has been pulled and how often it resulted in giving you credit
• Bankruptcies, tax liens, and other matters of public record
• Bills sent to a collection agency

We recommend reviewing your credit report with your loan officer so they can help identify areas for improvement. It could also be a good idea to speak with a credit advisor to gather more helpful information (just be careful not to pull your credit report too often, which could have a negative impact on your credit score). If you can do anything to raise your credit score during your home buying journey, you’ll open yourself up to better opportunities.