Your FICO® score is calculated using information from your credit report. Your FICO score will fall between 300 and 850. It is calculated using both positive information like how long you’ve made loan payments, and negative information like late payments. You can improve your FICO score by making payments on time, to demonstrate credit worthiness.
FICO scores (get more details) consider 5 types of information:
- Payment history – which looks at number of late payments and last late payment, both shown on your credit report.
- Amounts owed – which lenders will use to evaluate your debt-to-income ratio.
- Length of credit history – looks at when each account was opened, from the oldest account to the newest account.
- New credit – looks to see if you’ve opened several accounts in a short period of time.
- Types of credit used – which includes mortgages, car loans, college loans, credit cards and more.
There are three different credit bureaus – Equifax, TransUnion and Experian. Each one keeps a file on you and calculates a FICO score for you, and they’ll be similar but different. DO NOT apply for any other credit in the months leading up to your mortgage application and closing. In some cases, home buyers who have purchased furniture for their new home, have found their application denied due to the extra credit they’ve taken on.