Draft Credit Guide

Demystifying Credit – Mortgage & Beyond

Demystifying Credit

Your credit score is the key to unlocking the best mortgage rates. Learn how it works and actionable steps to improve it before you buy.

What makes up your FICO Score?

When mortgage lenders pull your credit, they are looking at a specific algorithm. Knowing what impacts this score helps you control it.

35%
Payment History: On-time payments matter most.
30%
Credit Utilization: How much debt you have vs. your limit.
15%
Length of History: Older accounts are better.
10%
New Credit: Hard inquiries from applying for new cards.
10%
Credit Mix: A blend of cards, auto loans, etc.

Score Ranges

Excellent 740 – 850
Very Good 700 – 739
Good 670 – 699
Fair (FHA Eligible) 580 – 669
Needs Work Under 580

Even with lower scores, our creative loan programs can often still find a path to homeownership for you.

How to Improve Your Credit Fast

Follow these steps if you plan on buying a home in the next 3 to 6 months.

1. Pay Down Balances

Aim to keep your credit card balances below 30% of their total limit. Paying them down to 10% is even better and can trigger a rapid score jump.

2. Don’t Close Old Accounts

Closing an old credit card shortens your credit history length and increases your utilization ratio. Leave them open, even if you don’t use them.

3. Freeze Major Purchases

Do not open a new furniture store card or finance a new car while getting ready to buy a house. Avoid any new “hard inquiries” on your report.

Need a free Credit Improvement Plan?

As a free concierge service, our advisors will review your report and tell you exactly which cards to pay down to maximize your score.

Talk to an Advisor