Today we are going to briefly explore and talk about what makes up your credit score. For most hard money lenders, your credit score did not usually make a very big difference. In the market today, on the other hand, a lot has changed, and even in the hard money area, your credit score is playing a larger role in lending decisions.
Many people are not well informed at all when it comes to the true facts surrounding their credit score and what it consists of. Here is a basic rundown on credit score factors:
Thirtyfive percent of your credit score comes from how you have made payments. This is the most weighted area of the credit score factors, and the newest reporting is weighted the most. The items that fall under this general category include
- Late payments
- Judgements
- Collections
- Charge offs
30% of your credit score is based on your accounts owed. Credit cards, home loans, auto loans, equity lines of credit and also RV loans all make a difference in this section.
15% of your credit score is made up of the length of credit history, how long your various credit cards and other loans have been open in other words.
Ten percent comes from new activity. Having your credit pulled falls under this category.
Finally, the last of your score comes from the kind of credit that you use.
