Credit Report and Credit Score

• Credit reports and credit scores are important factors when determining your mortgage score. Experian, Equifax and TransUnion are the three primary credit bureaus that assess your creditworthiness and translate that evaluation into credit reports and credit scores. These credit bureaus use the FICO scoring system to assess your ability to repay a loan. Scores range between 350 and 850, with lower numbers representing greater financial risk for loan repayment. Maintain high credit scores and positive credit reports to ensure a high mortgage score.
  
  

Current Debt

• A mortgage score measures your current debt load against your available income. Your debt-to-income ratio is evaluated by a loan officer to ensure that you have adequate income to cover a mortgage loan. Generally, most mortgage lenders look for a debt-to-income ratio in the 30 percent range. Income from employment, investment income and alimony are all used to determine your debt-to-income ratio. A high amount of revolving credit, like that associated with credit cards, can lower your overall mortgage score.
  
  

Payment History

• A mortgage lender analyzes your payment history to determine your mortgage score. Late utility payments, default auto loan payments and post-due credit card payments lower your mortgage score and your ability to qualify for a mortgage loan. Your payment history provides a lender with insight as to how well you manage your finances. Keep up with all of your current payments to other lenders and vendors to maximize your mortgage score.
  
  

Property Value

• A mortgage score is partially determined by the value of the property you are purchasing. Properties that are priced near or below their appraised value increase your mortgage score. A property that has depreciated over time lowers your mortgage score. Foreclosed homes, quick sale properties and Housing and Urban Development homes often have reduced property values.