Wednesday, April 11, 2018

Breaking Down Your Credit Score

Your credit score can impact a variety of things in your life, including homeownership. Your credit score and credit history is a large determining factor for mortgage approval. Some people may have no clue what their credit scores, while other know what their score is, but don't really understand how that number was determined. In today's blog, your Lake of the Ozarks mortgage lender breaks down the "credit score" according to the FICO model.

Credit Score Factors 


Your credit score is determined by 5 factors of differing importance. These include payment history, amounts owed, length of history, new credit and types of credit used.  
  1. Payment History - 35% - Your payment history is based on how often you pay your accounts on time. Late payments can lead to a lower credit score. 
  2. Amounts Owed - 30% - How much debt do you have, and how does that compare to your total credit used? Less is more in this case. Using more than 20% of your credit limit may lower your credit score. Lowering your debt can be the key to a better credit score. 
  3. Length of History - 15% - When did you first establish credit? The length that you've had a credit history is also a factor. A longer credit history of responsible credit use will likely lead to a higher credit score. 
  4. 4. New Credit - 10% - Opening several new credit accounts in a short period of time can lower your credit score. It's very important that during the mortgage process you don't open any new credit accounts. 
  5. Types of Credit Used - 10% - Credit comes in many different forms, from credit cards to auto loans, etc. Having experience with different types of credit can help your score. 

Credit Score Facts 


When it comes to understanding your credit score, a lot of people have no idea what their score is, how it's determined or what that means for them. Check out some of these fun facts revolving around credit scores in general. 
  • 45% of college students don't know what their credit score is.  
  • Over 1/3 of American adults admit they don't know their credit score. 
  • 18 years is the average consumer's oldest open credit line. 
  • 52% of adults in America haven't viewed their credit score in the past year. 
  • The average American has 13 credit accounts showing on their credit report, including nine credit cards and four installment loans. 
  • 699 is the average National Credit Score.
  • Most Americans use less than 30% of their available credit limits. Only 1 in 6 uses 80% or more. 
  • Maxing out credit cards damages credit scores by 10 to 45 points. 
  • 43% of women, compared to 32% of men, said it was important to know a partner's credit score before getting seriously involved. 
  • About half of Americans don't have a single late payment on their credit reports. 
  • More than 8 million people fall victim to identity theft in the U.S. each year. 
  • Over 144 million people haven't looked at their credit report in the last year. 

As your mortgage professional at the Lake of the Ozarks, I'm here to work with you every step of the way during the mortgage process. That starts with advice on fixing your credit if needed. We will discuss your Lake of the Ozarks home financing options and determine the best way to move forward with your particular situation. Give me a call at 573-746-7211 to get started today. 

For Lake area news, resources and tips on financial services, please 


Michael Lasson
Senior Loan Officer
NMLS #: 493712

4655 B Osage Beach Parkway
Osage Beach, MO 65065

Direct: (573) 746-7211



**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.





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