Knoxville Home Buyers – What Makes Up A Credit Score?
Credit scores are important, particularly for those who are wanting to buy a Knoxville home for sale. A credit score determines if you are eligible for financing and what types of financing your eligible for, and even your interest rate. So, what makes up your credit score?
Payment History
Late or missed payments will ding away at your credit score. To help build strong credit, it is important to ensure that you pay your bills on time and that you have a proven track record of a strong payment history. A strong payment history will show a lender that you have a history of paying your bills on time.
Overall Debt
The use of credit is a double edge sword. To build good credit, it is important to show that you’re able to responsibly use debt, however, you don’t want to over extend yourself. Generally, it is best to use less than half of your credit card limit to maintain a good credit score. If you have a total credit card limit of $10,000, you shouldn’t spend more than $5,000 of your overall credit at one time.
Length Of Credit History
The longer the credit history, the better. A long history of using credit responsibly is important to lenders when applying for a loan to buy a Knoxville home. It is also important to keep old credit account open, even if you don’t tend to use them.
New Credit
Every time you apply for a new loan or credit card, there is a ding to your credit score. A large number of credit inquiries can bring down your score. It can also be a red flag to a lender if you open up a large number of credit lines in a short period of time because it signifies that you may be unstable financially.
Types of Credit
Not all debt is bad. It can be good to show that you can use debt responsibly. But, it is also good to show that your debt is divided up over different sources of credit, like house payment, car payments or student loans. It is also
