
A visual breakdown of the five key factors that make up your credit score, including payment history, credit usage, and more.
Why Your Credit Score Matters
Your credit score plays a big role when you’re buying a home. Lenders use it to decide if they’ll give you a loan and what interest rate you’ll get. The better your score, the better your chances of getting approved—and saving money over time.
Let’s break down what goes into your credit score and how you can improve it.
1. How You Pay Your Bills – 35% of Your Score
The most important part of your credit score is whether you pay your bills on time. Late or missed payments hurt your score a lot. Paying on time every month shows you’re dependable with money.
2. How Much You Owe – 30%
This is about how much debt you have compared to your credit limit—also called your credit utilization. If you’re using too much of your available credit, it can hurt your score, even if you’re making payments. Try to keep your usage under 30%.
3. How Long You’ve Had Credit – 15%
The longer your credit history, the better. Lenders like to see that you’ve been using credit responsibly over time. That’s why it’s smart to keep older credit cards open, even if you don’t use them much.
4. The Types of Credit You Use – 10%
Lenders like to see that you can handle different kinds of credit—like credit cards, car loans, or student loans. Having a mix of accounts shows that you know how to manage different types of debt.
5. New Credit Applications – 10%
Every time you apply for new credit, it causes a small dip in your score. If you apply for a bunch of loans or credit cards in a short time, it can raise red flags. Only apply for new credit when you really need it—especially before applying for a mortgage.
Get Ready to Buy with Confidence
Improving your credit score takes time, but now you know where to focus. Start by paying bills on time, lowering credit card balances, and being mindful about applying for new credit. These small steps can make a big difference when you’re ready to buy a home.
Need Help Getting Mortgage-Ready?
Buying a home is a big step, and I’m here to make it easier. If you’re thinking about buying soon, let’s talk! I’ll help you create a plan to get your finances in shape and make the homebuying process as smooth as possible.
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