Raising your credit score can feel like an overwhelmingly impossible task. The truth of the matter is that improving your credit does not happen in one fell swoop. If it was easy enough to get a high score overnight, then more people’s credit would already be higher. When it comes to getting a mortgage though, a higher score definitely helps improve your chances of getting that pre-approval. To help you prepare for that, we would like to share a few factors that make up your credit score so you can start working on improving it today.

Payment History

This is what makes up the biggest portion of your credit score. Making on-time payments each month is massively important, because late payments can affect your credit history for up to seven years. Even just making minimum payments on your debts is better than being late.

Credit Usage

How much credit is available and how much are you using? Credit experts recommend staying at or under 30% of your credit limit. Vantage and FICO are two big credit scoring agencies and they list credit usage as the number two factor they consider when determining your credit score! If you qualify for a new credit card, take advantage of that opportunity – just make sure to stay under that 30% usage!

Credit History Length

Though this does not have the largest impact on your credit score, it does play an important role. Qualifying factors include the ages of your oldest and newest credit card accounts, plus the average of your accounts. The older your credit, the better you can show lenders your experience with managing credit.

Hard Inquiries

A hard inquiry (or “hard pull”) happens when you apply for a new line of credit. It shows that a creditor has looked at your credit file to see how much of a potential risk you are as a borrower. If possible, try to limit your hard inquiries to accounts that you are confident that you will be approved for. That will make the hard pull worth it!

All of these factors should be taken into consideration as you begin preparing everything you need to get your mortgage pre-approval. If your credit score is low, you can still apply for a mortgage! There are loans for all types of budgets and financial situations. Reach out to someone on our team today to discuss your scenario and what options might be available to you.