GUIDES / CREDIT SCORES
What is a Credit Score?
Your credit rating is a number that is determined from information in your credit report. Credit ratings range from 300 to 850, depending on the credit scoring agency. The higher the number, the better your credit rating. Credit is gained/lost via loans and financing and your ability to pay it off per your loan agreement. Late payments can negatively effect your score. Paying loans off early can positively effect your score.
What is a Credit Report?
Your credit report is a report of your credit history. It contains your personal financial information such as credit accounts (mortgage, auto, department store, etc.), listing when they were opened, their current balances, credit limit and whether they were paid on time; any outstanding taxes or liens against you; late civil or child support payments; court judgments (parking tickets, etc.) and any city, county, state and federal liens for unpaid taxes and bankruptcies.
How is my credit score determined?
There are three major credit reporting bureaus (Equifax, TransUnion, and Experian) that provide credit reports and credit scores. This is your FICO (Fair Isaac Corporation) score. FICO is a company that was the first to create a credit score in the 1980s. Now simply known as FICO score, it is a number derived from your credit reports. 70% to 80% of mortgage lenders use your FICO score. Since there are three credit-reporting bureaus, you have three FICO scores.
FICO scores are calculated by the following:
Payment History (35% of score): Have you paid your bills on time?
Amounts Owed (30% of score): What is your overall debt?
Length of Credit History (15% of score): How long have you been borrowing money? The longer the better!
New Credit (10% of score): Have you applied for new credit?
Types of Credit Used (10% of score): Lenders like to see all kinds of credit types — bank cards, car loans, student loans and more.
What score do you need to have to get a home loan?
Most loan types (to secure a low interest rate) require a credit score of 720 of higher. An FHA loan, one of the most common loan types for first-time purchasers, can usually secure a loan if their credit is 630 or higher.
If you are applying for a no-income-verification loan, whereby you forgo providing income documents because your income is not consistent or you are in a crunch for time, we will be looking for a minimum FICO score of 680 or higher. Lenders don't like to assume all the risk, so your good credit history is key.
Pierce County Location:
3620 100th St SW, Ste B, Lakewood, Washington 98499
Tel: +1 253 442 2403
Thurston County Location:
400 Union Ave SE, Ste 200, Olympia Washington 98501
Tel: +1 360 529 3905
For any general inquiries, please fill in the following contact form: