There are many factors that determine the credit score you need to buy a home for sale in Baltimore and whether or not a Lender will make a loan to a prospective borrower including income history, assets etc., but one of the most mysterious yet straightforward factors is credit history. The most widely used credit score is a FICO score. According to myfico.com, the official website for FICO, a credit score is “a number that summarizes your credit risk, based on a snapshot of your report at a particular point in time.”

The figure below shows how different aspects of your credit profile are factor into the overall score.

The largest factor is your payment history.

Are your payments on time or more than 30
days late? Late payments will adversely affect your credit score.

The next factor is the amount owed. Are
your credit cards maxed out?  To be conservative, try to keep you balances below 30% of the available credit.

What’s the length of your credit history?

Are all of your accounts newly opened or have
you had them for a number of years. Long time accounts demonstrate stability.

New credit is a small factor in that it demonstrates that you were a good risk to another creditor recently, but this is not something you really need to worry about. If you have a good long time payment history with your creditors with relatively low balances….those factors combined are more important.

Types of credit used is another small factor where a lender is looking to see if you have experience with different types of credit. A mortgage, credit cards, auto loans are all different types of credit. But again in the big picture of things, this is not as important as your payment history and the balances already owed.

If you’re just getting started in your search for your first home in Baltimore and have any questions about the credit score you need to buy a house or first time home buyer programs…we would be happy to help guide you through the process.