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Connecticut Mortgage: Understanding How Your Credit Score is Calculated

Hello Connecticut residents! My name is Ramazan Sinani and I am a Residential Mortgage Loan Originator for Northeast Financial of Connecticut. Today I would like to talk with you about credit scores and how they work!


To start off, many people have asked me how are Credit Scores calculated. Well, unfortunately the makers of the FICO score don’t disclose exactly how the scores are calculated. But what they do tell us is what criteria they look at:


– 35% Payment History
– 30% Amount Owed
– 15% Length of History
– 10% New Credit/Inquiries
– 10% Types of Credit Used.


Payment history is 35%!


The most important thing for Lenders is whether or not you make your payments on time. Lenders want to see if you have a good history of making these payments on time. The best indicator of this is how you’ve paid your bills in the past. Payments, collections, and bankruptcies all affect the payment history of your credit score. More recent delinquencies hurt your credit score more than those in the further past because it says a lot about your current ability to make payments.


Debt level is 30%


The amount of credit you have used compared to your credit limits is known as credit utilization. The closer you are to your limits, the lower your credit score will be. Keep your credit card balances at 30% or less of your credit limit to keep a good credit score! An example of this is that if your credit card has a $100 credit limit – ideally you never want to go above $30 in debt on that card.


Length of credit history 15%


Maintaining a long credit history is favorable because it gives lenders a good idea of what your spending habits look like. Believe it or not, it is a good thing to leave your long-term accounts open.


Inquiries are 10%


Each time you apply for credit, an inquiry will be added to your credit report. One too many applications for credit can mean that you’re either taking on a lot of debt or you are in some sort of financial trouble. Fortunately, even though inquiries are shown on your report for 2 years, this portion of your credit is based on inquiries made within a year.


Mix of credit is 10%


Having numerous, different accounts is also a favorable factor! This shows that you are experienced in managing numerous accounts. Unfortunately, for those who are excellent in this area, it is only significant to your credit score if you don’t have much other information to base your score on. Do not just open new accounts just to have a better mix of credit, open them as needed.


Your credit score is important to your mortgage. Please call me today with any questions or for a free consultation on getting approved for a mortgage.


Thank You,


Ramazan Sinani
Mortgage Loan Originator
Northeast Financial
NMLS: 1590862  Company NMLS: 117273
Cell: 203-695-6858   Fax: 203-413-6240