One of the most important factors a lender will consider when reviewing your application for a Kansas City home loan is your FICO ,or credit, score. The two largest influences on your credit score are how you pay your debts and how much debt you owe.
Each credit bureau has its own standards and guidelines for calculating your FICO score, so it will vary depending on the agency. Lenders will take the middle score from your credit report when considering your loan application.
Your FICO score is broken down into 5 different sections:
Keep in mind that each of these factors is weighed depending on your unique situation. For example, payment history for an individual who has been using their credit for a long time will be viewed differently than someone who has just started using their credit.
Your payment history carries the most weight when calculating your FICO score. Negative items typically stay on a credit report for seven years, but bankruptcies can remain for up to 10 years. Your payment history can include of the following factors:
If you are trying to improve your FICO score, you need to make sure to watch how much debt you obtain and carry. Your score will include any of these items that apply to you:
Taking on new credit too quickly can negatively affect your FICO score. The following items are considered in your FICO score as new credit components:
The length of your credit history is a very important part of your FICO score. If you do not have a long history of credit, it can be difficult to be approved for a Kansas City home loan. Credit history will look at:
The types of credit in use are also known as the “credit mix.” Don’t open accounts you don’t intend to use as it can negatively impact your score. The types of credit in use can include:
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