Understanding your Credit Score

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Understanding your Credit Score
What's in your credit score and tips on how to build good credit! 

Do you know your credit score?  Lenders use your score to determine whether you are worthy of extending credit and at what interest rate they should lend you money.  Understanding the components of your credit score will help you learn how to improve your credit score and will save you money! 

 Your Credit Score
A good credit score is a must have in order to obtain financing to purchase a car or home.  Measuring your credit is vital to being financially responsible.  It's also good policy to monitor your credit report yearly due to issues like identity theft.

 Did you know that you are entitled to a copy of your credit score yearly? To view your credit scores from all three credit bureaus, visit www.AnnualCreditReport.com for a free copy of all three reports or call 877-322-8228.  

 Credit Score Range

800-850+  The Best rates available! 
799-720– Very good, interest rates will be low! 
719-680– Good  
 679-620– Can purchase but may not receive the best interest rate ; can qualify for VA & FHA loans
 580-619  Low. May not be able to purchase a home  
 <580-350– Bad and cannot purchase with a loan

What's in your Credit Score?

1.  Payment History– 35% of your credit score
· Account payment information on specific types of accounts including mortgages, car payments, credit cards, retail accounts, and installment loans.
· Presence of any public records such as liens or bankruptcy, any collection or past due accounts
· Number of accounts paid as agreed
· Time since delinquency and how your bill is long past due
 2. Amounts Owed– 30% of your credit score
· Amount owing on accounts including number of accounts with balances
· Proportion of balance to current total credit limits on revolving accounts including credit cards
3.  Length of History– 15% of your credit score
· Time since accounts were opened
· Time since accounts have been paid or since any activity on accounts
4.  New Credit– 10% of your credit score
· Number of recently opened accounts
· Number of recent credit inquiries
· Time since credit inquiries or new accounts opened
· Re-establishment of positive credit history following past payment problems
5.  Types of Credit– 10% of your credit score
· Number of various types of accounts including credit cards, retail accounts, installment loans, mortgages
(these numbers are estimated and may vary slightly by source) 

Easy Tips to Increase your Credit Score
  • Do not close open accounts that have not been used. Contrary to popular belief, this hurts your credit score instead of helping it.
  • Examine your credit card interest on each card and the proportions between amounts owed and credit limit. If possible, transfer balances to open accounts with lower interest rates or to accounts that have a lower proportion between used credit and your credit limit.
  • Know your credit score and what is on your report– you may have open accounts with small balances (like utility bills, cell phone bill, small medical bills) that could easily be paid off and increase your score.
  • Get a credit card if you don’t have one! Next time you make a larger purchase such as a TV, finance it with no interest on a store credit card.
If you have any questions about credit score or buying a home, email us and we'll be happy to find a mortgage consultant who will offer a free credit consultation!  Just email our broker Pam@PensacolaRealtyMasters.com

 Thanks and have a great day, 
Nicole St. Aubin, Broker Associate
Realty Masters of FL~ #1 in Pensacola Property Management
4400 Bayou Blvd. #58B, Pensacola, FL 32503
Call us at (850) 473-3983
Over 45 Pensacola Rental Homes at www.PensacolaRealtyMasters.com