Credit Scores

How scores are determined

According to FICO, they weigh different aspects of credit differently:

  • 35% – punctuality of past payments later than 30 days past due
  • 30% – the amount of revolving debt, expressed as the ratio vs. total available revolving credit (credit limits)
  • 15% – length of credit history
  • 10% – types of credit used (installment, revolving, consumer finance)
  • 10% – recent searches for credit and/or amount of credit obtained recently

Credit Scores

A credit score is a single number that helps lenders and others decide how likely you are to repay your debts. One kind of credit score is a FICO score (FICO stands for Fair Isaac Corporation, the company that developed a common scoring method). FICO scores range from 300 – 850 points.

When you apply for a mortgage, your credit score is evaluated. Your credit score will be used to determine the terms of your mortgage and the interest rate.

Your credit score is based on several types of information contained in your credit report:

  • Your payment history.
    Late payments will decrease your credit score.

  • The amount of debt you owe.
    If your credit cards are at their limits, this can lower your credit score - even if the amount you owe isn't large.

  • How long you've used credit.
    Your credit history is important. If you show a pattern of managing your credit wisely, keeping credit card balances low, and paying your bills on time, your credit score will be positively affected.

  • How often you apply for new credit and take on new debt.
    If you've applied for several credit cards at the same time, your credit score can go down.

  • The types of credit you currently use.
    This includes credit cards, retail accounts, installment loans, finance company accounts, and mortgages.

Your credit score is only one factor in the credit decision. Mortgage lenders also look at your credit report, employment history, income, debt-to-income ratio, and the value of the home you want to buy.

What the Numbers Mean

FICO does not make specific statistics available to the public regarding credit scores. However, they do provide a snapshot that can help you understand how to interpret your credit score:

  • Credit scores ranging from 770 to 850 are considered very good, and the best credit rates are usually available to borrowers within this range.
  • Credit scores above 700 are considered good, according to FICO, and most borrowers' credit scores are within this range. The median credit score is about 725.
  • When credit scores are below the mid-600s borrowers may experience higher interest rates when looking for a loan.

It is important to remember that credit scores are like snapshots of your credit – they show a "picture" of your credit based on current information. By using credit wisely, you can improve your score over time.

Restoring Your Credit

It’s always in your best interest to improve your credit score.  The good news is that no credit score lasts forever - it changes over time, so you can improve it over time.

Every time you apply for a loan or credit card, use credit, or make or miss a payment, you build another entry in your credit report. You also raise or lower your credit score.

Here are ways you can improve your credit score over time:

  • Stop spending money you don't have.
    If you have a budget, stick to it. If you don't have a budget, make one.
  • Make at least the minimum payments, on time.
    This is something that can begin to improve your credit rating right away.
  • Pay off your accounts.
    If you have several accounts with small balances, try to pay them off. If you have accounts that went to collection, pay them off as soon as possible!  But don’t use one credit card to pay off another.  That is just transferring debt, not reducing it.
  • Limit your credit.
    It may be tempting to open a new account to pay off other accounts, but it is a dangerous trap that can cost you money and actually hurt your credit rather than help.
  • Use bankruptcy as a last resort.
    Filing for bankruptcy can keep you from getting a loan for a long time, raise your interest rates, and stay on your credit record for 7 to 10 years.

Fix errors on your credit report.

Sometimes, credit reporting agencies make mistakes that can damage your credit record, so it is important to check your credit report at least annually. If you see something wrong on your credit report, fix it immediately.


There is no "magic" way to fix your credit – only good credit practices and time.

Be wary of credit agencies that say they can "fix" your credit. For a step-by-step guide to fixing your own credit, visit the Federal Trade Commission's Credit Repair Web page.

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5101 North 12th Avenue, Pensacola, FL 32504
Phone: (850) 471-3349 | Toll Free: (855) 688-3349 | Fax: (850) 696-0994