5 Ways Your Credit Affects Your Mortgage Application

Basics

Your credit is made up of 5 major factors:

• past credit behavior
• current credit balances
• depth of credit history
• number of credit lines
• number of credit inquiries

Past Credit Behavior

This is your timeliness on paying debts in the past. This is usually tracked for the past seven years.

If you are late in making a payment this is reported on your credit report. Late payments are categorized as 30 day lates, 60 day lates, 90 day lates, or more. The late payment is also noted by month and year.

Current Credit Balances

This measures how much of your different credit lines you are using up. As you get closer to your maximum available credit balance your credit may start declining.

Depth of Credit History

This is the amount of time you have had credit. Usually credit that has been opened for at least a year helps.

Each credit line that you have has a "start date" listed on it so the mortgage lender knows when you started each credit line.

Number of Credit Lines

This is the number of credit lines you have. The more you have managed successfully the better your credit will be, generally speaking.

Number of Credit Inquiries

Too many recent credit inquiries may lower your credit rating.