How Credit Scores Work

Did you know there are some simple things you can do to dramatically improve your credit score, and potentially save thousands of dollars? In the video below we pull back the curtain and break down how credit scores are calculated.

Payment History

In this video, we discuss "payment history" which accounts for 35% of the potential points in your credit score. It makes sense that this category makes the biggest impact on your score because statistically, the primary indicator of whether you'll make your payments in the future is whether you've made your payments in the past.

Amounts Owed

In this video, we discuss "amounts owed" which accounts for 30% of the potential points in your credit score. This is the second heaviest-weighted category and is perhaps the most misunderstood.

 

Length of History

In this video, we discuss "length of credit history" which accounts for 15% of the potential points in your credit score. Gaining a lot of points in this category can take a significant amount of time, but there is a workaround we explain that could potentially help you gain points here much quicker.

 

Credit Mix

In this video, we discuss "credit mix" which accounts for 10% of the potential points in your credit score. Credit mix is exactly what it sounds like: Having a diverse mix of different types of credit! Having both installment and revolving accounts is a good start, but you'll gain more points by having an even broad mix of accounts like auto loans, mortgages, credit cards, etc.

 

New Credit

In this video, we discuss "payment history" which accounts for the final 10% of the potential points in your credit score. We cover how your credit score will be impacted when a lender pulls your credit, how long those inquiries will count against you, and how long your credit will be impacted when you open a brand new account.

 

Still Have Questions?

If you have additional questions, or if you're ready to take the next step by speaking with a REALTOR® or a Mortgage Loan Officer, then feel free to call us at (864) 362-2375, email us, or fill out the contact form below and it will be our pleasure to serve you.

 

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