When taking out a home loan, retrieving your credit report is one of the first things a lender will do. The credit report and the FICO score associated with it have far more to do with your chances of getting a loan than any of the lender’s internal math. Lenders of all sorts rely on credit reporting agencies such as Equifax, Experian and TransUnion.
Recently the experts at the Equifax Finance Blog put together an article to help home buyers called, “How Does Equifax Get the Information for My Credit Report?” In this article, the mystery of the credit report is revealed, and as it turns out, the components are quite simple. Take a look at this article and see for yourself.
The article even explains how your credit score is calculated by using five major factors:
- 35 percent – Payment history
- 30 percent – Amounts owed
- 15 percent – Types of credit
- 10-12 percent – Number of new accounts and inquiries
- 5-7 percent – Length of you credit history
The article also explains that your credit score is frequently changing due to activity on your credit report. Just taking the time to get ‘pre-approved’ for a home can get documented in your credit report, along with any debts or lines of credit to your name and more. Information will eventually fall off your credit report over time and if it was something negative, like a delinquent account, it will generally improve your credit score.
To learn about all of the factors that make up your credit report and affect your credit score, check out the Equifax Finance Blog and follow @EFXFinanceBlog on Twitter!