Understanding Your Credit Score
Your score is one part of the mortgage picture. It can affect available loan options, pricing, mortgage insurance, and the documents a lender may need to review.
What usually affects a score
- Payment history: paying debts on time is usually the biggest factor.
- Revolving balances: high credit-card balances can hurt, even if you pay on time.
- Credit age and mix: older accounts and a healthy mix of account types can help.
- Recent credit activity: new cards, new auto loans, buy-now-pay-later accounts, and cosigned debt can change the file.
- Derogatory items: collections, charge-offs, late payments, bankruptcies, and judgments may need explanation or seasoning.
What to do before applying
- Review your credit reports for errors and dispute inaccurate items early.
- Avoid opening new accounts or financing large purchases before you know how they affect your mortgage plan.
- Keep paying every account on time, even if you are waiting to apply.
- Ask before paying off or closing older accounts; the best move depends on the full file.
One important caveat
- Credit apps and lender mortgage scores may not match. A loan-specific credit report, pulled with proper authorization, is the source used for mortgage review.