What's in Your Credit Score?


You may think your credit score is just a number, but to a lender, it can be the difference between offering you the best available market rate, and a much higher mortgage payment.


Understanding what goes into your credit score is important. Short credit history can been seen as a negative on your report, as it reflects a shorter time period of financial responsibility—the less experience you have making (any) payment, the less likely you are to understand how to handle a larger payment, like a house. Late payments can put a damper on your credit score, too, as they reflect poor money management. Additionally, having a high debt-to-income ratio can impact your score, because it shows you are charging beyond your means.


Here are some tips on improving your credit score before applying for a mortgage:


  1. Get a credit card if you don’t have one. Showing lenders you’re able to manage small amounts of debt and be responsible.
  2. Use your credit cards lightly, if at all. Some suggest not making anypurchases 6-9 months before applying for a mortgage. This means no fancy restaurants, new Play Station consoles, or shopping sprees. Use the money you’re not spending and apply those dollars to your debts! Maintaining balances under 30% of the credit limit can really make a difference.
  3. Make payments on time for car payments, medical bills, and credit cards. If possible, pay off these installment loans as low as possible.
  4. If you’ve been a good customer, some lenders may agree to forgive that one late payment from your credit history. Make some calls and see who would be willing to help.
  5. Don’t recognize something on your credit report? Mistakes happen—but it’s ultimately up to you to do your homework. Dispute old negative claims when you can.


You may be missing out on the best interest rates if your credit score is not above 760, and scores in the 600’s may need a couple years to resolve. If you’re ready to build your home, but need a little help with your credit score, Faber can set you up with credit counseling to get you on the right track. We’ll work with you to get you in the home you deserve.