Facebook Twitter Instagram
    Mortgage.info
    • First Time Homebuyer
    • Loan Programs
    • VA Programs
    • Refinancing
    • Beyond the Mortgage
    Mortgage.info
    Home»Buying a Home»How to Improve Your Credit Score, Straight From FICO and VantageScore
    Buying a Home

    How to Improve Your Credit Score, Straight From FICO and VantageScore

    JustinBy JustinFebruary 20, 2017Updated:February 24, 2017No Comments4 Mins Read
    Facebook Twitter Pinterest LinkedIn Tumblr Email
    Share
    Facebook Twitter LinkedIn Pinterest Email

    How to Improve Your Credit Score Straight From FICO and VantageScore

    Lenders have been using FICO or VantageScore credit scores in assessing mortgage applications. They primarily rely on these scores to determine the rate a borrower applying for a mortgage will get. Credit scores are a reflection of your credit report, a log of your credit activities in the past.

    We have thus gathered a handful of tips found on FICO and VantageScore websites in improving your credit score and ultimately boosting your access to better mortgage rates.

    Share your mortgage plans with us.»

    How Is a Credit Score Calculated?

    FICo and VantageScore have their own method of calculating credit scores based on the information on credit reports. Pay attention to the components and the corresponding weight that make up a credit score at each of FICO and VantageScore. Take a look.

     

    FICO Score VantageScore
    Component Weight Component Weight
    Payment History 35% Payment History 40%
    Total Amounts Owed 30% Depth of Credit/Length of Credit History 21%
    Length of Credit History 15% Utilization of Credit 20%
    Types of Credit Used 10% Balances 11%
    New Credit 10% Recent Credit 5%
    Available Credit 3%

    Credit Score Improvement Tips 101

    Now, let’s focus on the behavior that would have a positive influence on your credit score and improve it over time.

    1. Pay bills on time. Your payment history takes up 35% at FICO and 40% at VantageScore. If you’ve been timely in your bills payment, you are handling your debt wisely.

    FICO suggests that setting up a payment reminder so you can promptly pay your bills. Automate payments on your existing debts using your debit card.

    VantageScore reminds about not missing out on any payment. Your first late payment entails a slight drop but being late on other debt payments signifies a credit risk and a huge score drop.

    We can help you shop for loans and rates.»

    Even with missed payments, you can strive to remain current on your accounts. Delinquency could land your account in collections, which takes seven years to remove.

    2. Carry sufficient debt. It’s okay to owe money but you can only carry as much. Total amounts owed is 30% of your FICO score while in VantageScore, this equals to: 20% for utilization, 11% for balances and 3% for available credit.

    According to FICO, reduce the total amount you owe by not using your credit cards in the meantime or paying down some of your debts starting with those with the highest rates. Paying off some debts might be wiser than moving it around. If you do the latter, you end up with the same amount owed but with fewer accounts which could lower your score.

    VantageScore advises to not use all of your available credit and if you do, keep your outstanding balance below 30% of your credit limit across all accounts. By keeping your debt at that level, you will appear to the lender as someone with sufficient access to credit without straining for additional funds.

    We have access to a network of reputable lenders.»

    3. Apply for credit prudently. New credit constitutes 5% of your VantageScore and 10% of your FICO score. It also affects your depth of credit of 21% at VantageScore and FICO’s length of credit history of 15%.

    Per FICO, new accounts are useful to build or rebuild your credit by paying your bills on time. But don’t open too many accounts in a short span of time if your length of history is fairly new. It’s also okay to shop for rates within a certain period of time, with inquiries leading to a single loan instead of multiple credit lines.

    VantageScore recommends applying for loans only when you need it. Also, avoid having too many new accounts at once because it could cast doubts on your ability to manage them.

    4. Maintain a good mix of debts. FICO allots 10% for a good credit mix of revolving debt like credit cards and installment debts like car loans, home loans, and personal loans.

    To VantageScore, having a good mix shows you are an experienced credit user. FICO, however, warns about opening new credit lines just for the purpose of meeting the credit mix criterion as it might not raise your score.

    Click here to discover worthwhile mortgage deals.»

    Justin
    + posts

    Justin McHood is a managing partner at Suited Connector and has been recognized by national media outlets as a financial expert for more than a decade.

    • Justin
      https://mortgage.info/author/justin/
      House Bill Adjusts HMDA Requirements for Small Lenders
    • Justin
      https://mortgage.info/author/justin/
      Senators Propose Measures to Protect Consumer Data Post-Equifax Breach
    • Justin
      https://mortgage.info/author/justin/
      HUD: $2-Bil. Funding to Fight Homelessness in Local Communities
    • Justin
      https://mortgage.info/author/justin/
      What Does the New Year Hold for HELOCs? Projections, Rates in 2018
    available credit borrowers credit mix Credit Score credit utilization FICO 8 FICO scores lenders new credit payment history total debt owed VantageScore VantageScore 3.0
    Share. Facebook Twitter Pinterest LinkedIn Tumblr Email
    Justin

    Justin McHood is a managing partner at Suited Connector and has been recognized by national media outlets as a financial expert for more than a decade.

    Related Posts

    The 4 Questions You MUST Ask Before Hiring a Real Estate Agent!

    December 10, 2022

    The ABCs of Home Buying: How Much House Can You Afford?

    November 24, 2022

    Don’t Overpay for Your Mortgage Refinance: Here’s How to Slash Your Costs and Save Big!

    November 22, 2022
    Mortgage.info
    © 2023 Mortgage.info Designed by ThemeSphere.

    Type above and press Enter to search. Press Esc to cancel.