It's no secret that your credit score can make a big impact on your interest rate (think payment) when getting a new mortgage. But what goes into to making a great score? It's a lot more than just your payment history and the exact formula is a closely guarded secret by Fair Issac - the inventors of the FICO score. So, here's a quick breakdown of the most important factors:On-Time Payments - this one's a bit of a no-brainer and the biggest one. Lenders want to see that you'll make on-time payments in the future.Credit Used - Responsible Credit Usage is something lenders look for. Try to keep below 30% of your available credit. Maxed out credit lines will hurt your score.Average Age of Credit - The older the better. Lenders want to see that you have experience in managing your lines. Think long and hard about canceling your oldest cards.New Accounts Opened - Be wary about opening too many accounts too quickly. They especially focus on the last 2 years. If possible wait a few years between opening new lines.Recent Inquiries - Even if you're just shopping for a new car, be conscious about running your credit score too often as lenders interpret lots of inquiries as increased risk.If you stay on top of these points, you'll be in good shape to buy when the time is right. Many lenders can also give you a little bit of credit "coaching" to help you get your score up to a better rate threshold. Bottom line - stay diligent and get in touch with a lender to learn what more could be done to improve your score.
