Credit Basics

For years, consumers have been left in the dark about true credit score factors and how they affect one’s ability to get a loan. Now, with direct access to self-serve websites consumers are finally empowered to gain greater insight into personal credit, credit score myths, security against identity fraud and theft, and how to correct or improve a score. See the links below to have credit scores explained further.

A credit score is the result of a mathematical equation that evaluates many types of information that are on your credit report. Potential lenders will usually review your credit report and credit score, along with other factors, such as your ability and likelihood to repay debt.

Credit scores are often called “FICO scores” because most credit scores are produced from software based on a model developed by Fair Isaac and Company (“FICO”). For more information about FICO scores, go to

The FICO score generally ranges from 300 to 850, and a higher score indicates a lower credit risk. FICO scores are calculated from many sources of information in your credit report, which is based on the importance of the following five categories for the general population:

  • Payment History 35%
    Were Payments Made on Time?
  • Amounts Owed on Accounts 30%
    Is the balance owed close to the limit?
  • Length of Credit History 15%
    How long have your accounts been open?
  • New Credit 10%
    How many new accounts have been opened?
  • Types of Credit Used 10%
    Mortgage, auto, consumer finance accounts, revolving and installment loans.


  • Your race, color, national origin, sex, age, marital status
  • Your salary, occupation, title, employment information, or residence address
  • Any interest rate being charged on your credit accounts
  • Any items such as family/child support, rental agreements, credit counseling participation

Your FICO score is a “snapshot” of your credit history at a given point in time and can change based on the factors that make up your credit score.

  • Late Payments – Pay your bills on time, and if you have missed a payment, get current.
  • Credit History – When you payoff a debt or collection, or close an account, the credit reference still remains on your credit report for a minimum of seven years.
  • High Balances – Keep outstanding balances low on credit cards and other “revolving” accounts.
  • New Credit – If you have been managing credit for a short time, don’t open a lot of new accounts.

Your score can improve by managing your credit responsibly over time and following some basic tips:

  • Make sure the information in your credit report is correct. You are entitled to one free credit report annually from the three credit bureaus – Experian, Transition, and Equifax. Visit to obtain your free reports. You may also purchase a copy of your credit score report through this website.
  • Review your credit report for accuracy (review the account-opened date, account balance, account limit and last activity information). Act quickly to correct erroneous information.
  • Pay down high credit card and revolving account balances, but don’t close the account. Don’t apply for credit that you don’t need – excessive credit report “inquiries” can lower your score.
  • Avoid moving credit balances from one account to another just to take advantage of low introductory interest rates. The combination of “inquiries” and “new accounts” can negatively impact your score.
  • If possible, avoid “finance company” type credit accounts, including “90-day” and “12 months same-as-cash” accounts. Mortgage loans, installment loans and revolving credit card accounts impact your score more favorably than finance company accounts.

Mortgage Checklist


  • Your social security number


  • Bank statements for past two months
  • Investment account statements for past two months
  • Life insurance policy
  • Retirement account statements for past two months
  • Make/model of vehicles you own along with their resale value


  • Credit card account information, including balance & monthly payment
  • Auto loan account information, including balance & monthly payment
  • Personal loan account information, including balance & monthly payment


  • Current pay stubs and W2, or if self employed, past two years of tax returns

If you currently own Real Estate:

  • Mortgage account information, including balance & monthly payment
  • Home equity account information, including balance & monthly payment (if applicable)
  • Home insurance policy information