Your credit score is used by a lender to help determine whether you qualify for a credit card, loan, or service. Credit scores are used to estimate the risk you may carry as a borrower—specifically, if you can make payments on time. Generally, the higher the score, the less risk you present to the lender.
Applying for new credit can impact your credit score. There are two categories of new credit inquiries that consumers use when applying for credit:
Rate shopping: Inquiries posted when a consumer is shopping for a mortgage loan, student loan, or auto loan are recognized by the credit scoring system as rate shopping. While all the inquiries will show on the credit report, only the first inquiry will impact the credit score during a 30-45 day time frame.
Seeking new credit: If a consumer applies for multiple credit cards in a short period of time, each inquiry will impact their credit score. The impact of a single credit inquiry is minimal but seeking multiple new credit lines can lower your score.
Your credit score is determined by five components of your credit habits. Improvements in the two most important categories, “Payment History” and “Amounts Owed,” will have the most dramatic effect on your credit score and help you to reach your long-term financial goals.
35% Payment History – Late payments can damage your score quickly, but a record of on time payments helps your score.
30% Amounts Owed – The more you owe in proportion to your credit limit, the lower your score will be. Also known as "utilization."
15% Credit History – The longer your history of responsible credit, the better.
10% Types of Credit – Responsibly managing different types of credit such as auto loan, and credit cards can help your score.
10% New Credit – Opening several accounts in a short time may lower your score.
Liberty FCU Mortgage Loan Originators can refer you to our Mortgage Credit Counseling Team as part of the application process. We can help you improve your credit scores to qualify for the best mortgage loan program to meet your needs. Our credit counseling team can provide a detailed step by step plan and estimate a timeline when you can potentially reach your score goal. Contact us at (800) 800-9271 today!
Frequently Asked Questions
Planning to make a home purchase in the next six months?
How long does information stay on my credit report?
How do I stop the stream of mailed pre-approved credit card offers and the excessive solicitation phone calls from random mortgage lenders when applying for a mortgage?
Are companies that claim they can improve a credit report for a fee or pre-approved offers from the mail reliable?
Can a consumer correct an error in his or her file?
Where can I get a free copy of my credit report?
Do credit reports contain information about a consumer’s personal lifestyle?
How private is the information in a credit report?
What is in a consumer credit report?
Mortgage Credit Counseling
Contact our free mortgage credit counseling department at (800) 800-9271 to help you on the path to homeownership!
Liberty Federal Credit Union Mortgage Credit Counseling Services are provided as a guide to building positive credit. Scoring simulation models are patterned after FICO scores used for mortgage lending but are not exact matches. Credit scoring is a snapshot of your credit history at the time the credit report is pulled. Updated creditor information can change any simulation forecast. The advice given does not guarantee credit improvement and is not considered a promise to lend. All applications are required to go through the pre-qualification and full underwriting process and be approved for closing before credit is extended.
Frequently Asked Questions
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