What Is a Credit Score?
Your credit score is a three-digit number between 300 and 850 that tells lenders how likely you are to repay borrowed money. Higher is better. Most mortgage lenders want to see at least 580-620, though better scores mean better interest rates. Think of it as your financial report card.
The Five Factors
Your score is calculated from five factors: Payment history (35%)—do you pay on time? Credit utilization (30%)—how much of your available credit are you using? Length of credit history (15%)—how long have you had credit? Credit mix (10%)—do you have different types of credit? New credit inquiries (10%)—have you applied for lots of new credit recently?
Which Score Do Lenders Use?
You actually have three credit scores—one from each bureau: Equifax, Experian, and TransUnion. Mortgage lenders pull all three and use the middle score. If your scores are 650, 670, and 680, they use 670. If buying with a partner, lenders typically use the lower of the two middle scores.