Here’s what makes up your credit score and how it can either hurt or help you.

There are five key components that determine your overall credit score or rating. Here’s a rundown on each of them and how they can hurt or help your score:

1. Payment history. This composes 35% of your score and reflects whether you have made payments on time or not. Missing payments or late payments will harm this part of your score.

2. Credit utilization. This is 30% of your score. It’s a measure of the amount owed in relation to the amount available. A person might have a $4,000 outstanding balance on a $20,000 limit. This would be considered acceptable at a 20% ratio. Owing $15,000 on a $20,000 balance would be a 75% ratio and negatively affect this part of your score.

“Missing or late payments will harm your score.”

3. Length of credit

4. New credit

5. Type of credit

The combination of all five areas makes up your total score which lenders use to determine creditworthiness. The best place to get your credit score if you’re planning on buying a home is from a trusted mortgage professional. They can suggest ways to improve your score and make sure you’re protected when making one of the largest investments in your life.

If you have any questions for me, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.