Have you very wondered how a bank decides to grant you a loan? Banks use a credit scoring system to determine if you would be a good risk for credit. The higher your score, the lower the bank is at risk.
What makes up your credit score? There are several factors that are reviewed in determining your credit score.
1st – 35% of your score is determined by your payment history. Do you pay your credit card, student loans, car loans, and mortgage payments on time?
2nd – 30% of your score is based on how much you owe. The closer you are to maxing out your; credit limits the higher risk you become.
3rd – 15% is decided by how long you have had credit. The longer you have an established credit history the better your score will be.
4th – 10% of your score is based on new credit. Opening several new accounts in a short time will have a negative effect on your credit. Also having a high number of inquires in a short time can do the same.
5th – The final 10% is determined by the kind of credit you use. Having a mix of credit cards, retail accounts, finance company and mortgage loans is considered when applying for credit.
Credit scores are also called a FICO scores. What is a good score? Your credit score could range from +800 to -400.
Wondering what your credit score is? You can go to www.annualcreditreport.com and get a FREE copy of your credit report with scores from all three reporting agencies in the country.
Whatever your score may be, WE CAN HELP! No score is too high or too low. The sooner you buy a home from Dakotaland Homes, the sooner you can start to establish credit!