Understand How Your Credit Score is Calculated

Every account you have that involves you borrowing money from a lender appears on your credit report. Your report shows how long you have had the account, how much you owe, and how many on time and late payments you have made. Your credit report also displays collection accounts and public record items, like bankruptcy, foreclosure, and tax liens.

The formula to calculate your credit score is proprietary, but it is based on five main factors. The most important is your payment history, followed closely by the amount you currently owe, particularly compared to what you originally borrowed or are eligible to borrow on a credit card. The other three factors are your length of credit history, variety in types of credit, and your recent credit applications and accounts.

Your credit score plays a significant role in your mortgage because it affects your approval decision and interest rate. Whether you’re looking to buy your first home or exploring refinance home mortgage options, your credit score matters. Get an interest rate quote and learn more about Orange County mortgages by contacting Avis Lending today!

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