Credit scores range between 200 and 800, with scores
above 620 considered desirable for obtaining a mortgage. The following
factors affect your score:
1. Your payment history. Did you pay your credit card
obligations on time? If they were late, then how late? Bankruptcy
filing, liens, and collection activity also impact your history.
2. How much you owe. If you owe a great deal of money
on numerous accounts, it can indicate that you are overextended.
However, it’s a good thing if you have a good proportion of
balances to total credit limits.
3. The length of your credit history. In general,
the longer you have had accounts opened, the better. The average
consumer's oldest obligation is 14 years old, indicating that he
or she has been managing credit for some time, according to Fair
Isaac Corp., and only one in 20 consumers have credit histories
shorter than 2 years.
4. How much new credit you have. New credit, either
installment payments or new credit cards, are considered more risky,
even if you pay them promptly.
5. The types of credit you use. Generally, it’s
desirable to have more than one type of credit — installment
loans, credit cards, and a mortgage, for example.
For more on evaluating and understanding your credit
score, visit www.myfico.com.