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UNDERSTANDING

Your Credit

Getting Credit Savvy

Your credit score plays a large role in getting the home loan with the most favorable terms. Knowing your score and reviewing your credit report regularly may help prevent unexpected surprises.

You can get a free copy of your report annually from all three of the major credit reporting agencies by visiting Annual Credit Report and requesting it. Once you receive it, review each item thoroughly, check for mistakes, and address any errors immediately. Be sure to contact both the credit bureau and the creditor that reported the mistake to have it fixed.

The FICO Formula

FICO scores are calculated by taking into consideration payment history, amounts owed, length of credit, and in-use/new credit.

Payment history looks at whether the payments have been made on time in the past and looks at public records and collection items. It’s important to understand that an overall “good picture” outweighs a few late payments.
The amounts owed considers the number of accounts that are “maxed out” and the overall number of accounts with balances. While owing money doesn’t necessarily mean high risk, a low amount of available credit left can be a sign of possibly being overextended.
The length of credit history looks at how long you’ve had your accounts. Generally a longer credit history is beneficial, but it also takes into account how long it’s been since certain accounts have been used.
In-use credit is typically not a key factor unless the overall history is very short. New credit can have an impact if there were several accounts opened recently—or all at the same time.

Putting it All Together

Now that you know your score and what factors are included, it’s important to understand what the score means. Typically, a score over 740 is considered excellent, while a score under 660 is considered at least somewhat challenged. We have loan programs for nearly every category of score, so don’t despair. By working with a loan advisor, you can work on raising your score with some changes to how you’re spending your money—or take a look at the programs that are available to you now.

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Copyright ©2024 Shining Star Funding A division of American Pacific Mortgage Corporation | NMLS ID # 1850 (www.nmlsconsumeraccess.org) | 6101 Bollinger Canyon Rd #344, San Ramon, CA 94583 Phone (925) 820-2981 | Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act.

Interactive calculators are self-help tools. Results received from this calculator are designed for comparative and illustrative purposes only, and accuracy is not guaranteed. Shining Star Funding is not responsible for any errors, omissions, or misrepresentations. This calculator does not have the ability to pre-qualify you for any loan program or promotion. Qualification for loan programs may require additional information such as credit scores and cash reserves which is not gathered in this calculator. Information such as interest rates and pricing are subject to change at any time and without notice. Additional fees such as HOA dues are not included in calculations. All information such as interest rates, taxes, insurance, PMI payments, etc. are estimates and should be used for comparison only. Shining Star Funding does not guarantee any of the information obtained by this calculator.