Having a good credit score lets banks and mortgage lenders know that you’re a low-risk investment. Making sure that your credit is in tip-top shape is a must for house hunters. Even though there’s no published algorithm that explains exactly how your score is determined, we do know that certain factors play a definitive role in comprising your score. Here’s a breakdown.

Payment History

When a lender looks at a candidate, they want to know how responsible they are at paying back their debts. If you have a solid history of making payments on time, then a lender feels confident that you’ll pay them back as well. Having a series of delinquent accounts presents a red flag, so making your payments on-time is an important factor in determining your score.


Length of Credit History

Your credit history details how long you’ve had open credit accounts. Lenders and creditors like see if you have a history of making payments on time. Another factor is how long you’ve had your newest card. If you’re constantly opening new credit cards and carrying a balance on them, you may be viewed as unstable.


Hard Inquiries

A hard inquiry is when a lender checks your credit after you have applied for a new account. An example would be applying for an in-store credit card. Having too many hard inquiries will have a negative impact on your credit score.


Used Credit vs. Available Credit

If you have three credit cards and they are all maxed out, then your credit score will be negatively impacted. Lenders want to see that you can use credit responsibly and pay off the balance.