Page 33 - The Latest Homebuying Guide

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become your credit score. Good relationships give good scores,
and bad relationships give bad scores. One of the biggest credit
score creators used by the bureaus is FICO, which stands for Fair
Isaac Corporation.

Factors that affect your credit score
FICO uses five factors that affect your credit score:

1. Payment history – Making on-time payment (35%)

2. Credit utilization - Amount owed (30%)

3. Length of credit history - How long account is opened (15%)

4. Types of credit used – The mix of accounts (10%)

5. New credit - Recently opened accounts and inquiries (10%)

Your FICO scores range from 300 to 850. This means that you can
move your score by 500 points in either direction. Your
commitment should be to always move towards 850!

Getting Credit and Improving the one you have
Without a credit history, lenders have no idea whether they can
trust you to repay them. Almost all financial activities require some
level of credit or credit history. If you want to purchase a house,
your credit must be ranking at least in the “good” category or else
you will pay severely for it. If you have never done anything with
your credit, the first thing you want to do is establish a credit
record, and be responsible with it.

Here is one option to establish or improve your credit:
Contact your bank and let them know that you want to build your
credit, using one of their “secured” credit cards. If they don’t offer

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