Credit score factors for homebuyers with Premium Mortgage Corporation

We’ve all heard of credit score, right? That score that directly affects every large purchase you intend to make throughout your life. That’s a big impact. But don’t worry, we are here to help. Here’s a complete guide to understanding your credit score and how you can improve it for the future!

What is a Credit Score?

A Credit Score is a 3-digit number based on information from your credit reports, designed to help lenders determine how likely you are to repay a loan.

If your credit Score is less than stellar, you might have difficulty obtaining a loan with reasonable mortgage rates. Typically, a 640 minimum is key to be pre-approved for most mortgages.

Where can I find it?

To access your credit score, there are several sources you can use

  • Check your credit card or other loan statement.
    • This a relatively new feature of credit card and loan companies. Check your next statement or your account online.
  • Talk with a non-profit counselor.
    • Non-profit credit counselors can help you pull a free credit report and score. They’ll also walk you through them, so you have a full understanding.
  • Use a credit score service.
    • These services can be found with one search online however, buyer be wary, some sites are not funded by their ads and may offer a short free trial. If you’re not looking for a membership, be sure to cancel the trial before you’re charged, or simply try a different source.
  • Buy a score.
    • You can directly buy your FICO credit score at

Please note: some sources provide an educational score as opposed to the actual score a lender would use. For most these scores are close or even the same, but for some they’re vastly different. Be sure to check which score you are choosing to pull.

How is your score?



% of People





Very Good









Very Poor


What Factors Make Up a Credit Score?

35% Payment History; do you pay your bills on time?

                The amount of on-time payments you have directly impact your report. Both on-time and late payments help lenders determine if you are a trustworthy borrower. The higher amount of late payments you have, the less trustworthy you seem to lenders.

30% Total Debt; how much debt do you have?

                You can track down your debts by contacting your creditors directly or accessing your credit report. If those don’t work, there are free sources online that can help.

15% Length of Credit; how long have you had credit?

                Your oldest credit line is basically the beginning of your credit timeline. Think of this as proof of experience. The longer you have been establishing credit, the more experience you have.

10% Credit Variety; can you handle multiple types of credit?

                A high credit score is great, but if it’s only established from the one credit card you opened in college it can raise the question; can you handle another loan?

10% Frequency of Application; how often do you apply for credit?

Frequent credit inquiries are a red flag for lenders. These could include a number of things including refinancing applications and opening new lines of credit.

Ways to Improve your Credit Score:

  • Pay your bills ON TIME.
    • Any missed payments count against you. Stick to your payment agreement to avoid penalties.
  • Leave good debt on your report.
    • Good debt…sounds like an oxymoron. Good debt is old debt. In other words, if you have handled your debt well and paid as agreed, this is considered good debt because it shows you can handle lending agreements. The longer your history of good debt, the better your score.
  • Dispute errors on your credit report.
    • You can do this through three credit bureaus: Equifax, Experian, and TransUnion.
  • Pay off collection accounts.
    • A collection account is a separate account made on your credit report after a debt is sold by a company to a collection agency. If you settle these debts for less, that is OKAY! Doing so will impact your credit score the least.

At Premium Mortgage Corporation, we are here to help. If you have any further questions about your credit score, we have the resources to assist in improving your credit score. Please contact your local Mortgage Loan Officer!