In any mortgage situation, credit score is a vital consideration. Your score will impact which home loans you’ll be eligible to apply for, and can be the single largest factor in determining the all-important mortgage rates you receive for loans you’re approved on.

At Community Lending Group, we have home loan options available for people with all ranges of credit score. A better one gets you more options, though, and this often starts with a solid understanding of the important crux points involved in credit score calculation. Here are these crux points, and how you can stay on top of them.

Card Utilization Rate

This is a basic ratio that’s very important to how major credit bureaus calculate credit. It’s not only important that you have credit, but also that you use it and repay it in a timely manner. This proves to them that you’re creditworthy. Add up your total open credit balances, and then divide this total by your total credit limit. If this ratio is too low (ask a broker what your thresholds should be), it could lower your credit score.

Average Account Age and Activity

It’s also important to show a long history of good credit. For this reason, never close one of your older credit accounts anytime when you might need a good credit score – this will eliminate a source of credit, and lower your utilization rate.

In addition, holding multiple accounts and making on-time payments is a valuable tool for credit score. However, this is a relatively small factor, so don’t go too overboard trying to open up extra avenues of credit if it means putting any other financial area at risk.

On-Time Payments

There are specific trackers in place within credit score calculators for the average timing on your bill payments. If too high a percentage of them are late, your score will be lowered.

Derogatory Marks

An even worse outcome than late or missed payments involves a derogatory mark – major events like a bankruptcy, foreclosure or lien. These events will stay on your score for years, often decades, and they should be avoided at all costs.

For more information on credit score, or to find out about any of our comprehensive mortgage services, contact a broker at Community Lending Group today.