Credit scores are an important factor in mortgage loans but many consumers are unsure about what causes them to receive that score. The typical score model for mortgages are FICO Scores. They are determined by five main categories:

35% is based on your payment history. (Including all accounts)

30% is based on the amount you owe creditors. (Especially revolving accounts with high balances)

15% is based on how long you have been using credit. (The longer you have a good payment history, the better)

10% is based on your applications for new credit.  (If you are loading up on credit it may damage your score)

10% is based on your ‘mix' of credit. (Numerous finance company accounts may lower your score)

The data used to compile credit scores is based on information reported by creditors to Equifax, Experian, and Transunion. It does not include information about income, race, sex, or religion. There are key factors to maintaining a good FICO Score:

• Pay your bills on time. (Even one late in the past 12 months can do significant damage)
• Keep balances low on revolving accounts. (Accounts with balances over 30% of the credit limit may lower your score)
• Avoid frequent balance transfers. (Numerous credit applications or balance transfers may lower your score)
• Review your credit file at least once per year (This enables you to determine any errors or potential fraud)

If you feel there is an error on your file, contact the creditor in question and request an investigation. You should also dispute the item with the bureaus at the addresses below:

     EQUIFAX - PO BOX 105873 ATLANTA, GA 30348

     TRANSUNION - PO BOX 1000 CHESTER, PA 19022

     EXPERIAN - PO BOX 2104 ALLEN, TX 75013