The score that matters most

You can get overwhelmed with numbers as you go through the process of securing a mortgage loan—the money you’re putting down, the interest rate, the cost for points and insurance, the number of months for the loan, the monthly payment. But there’s a three-digit number that trumps the rest: your credit score.

That number gives the lender an idea of how good you are at repaying your debts. Your credit score plays a large role in determining whether or not you’re approved for a loan and under what terms.

What affects your credit score
The most commonly used system for determining a credit score comes from the Fair Isaac Corporation—widely referred to as a FICO score. Different data from your credit history goes into an algorithm to produce your score, such as:

• How much money you owe and the types of credit used
• Your history of paying debts
• The length of your credit history
• Whether you’ve pursued credit recently

Is that good or bad?
Credit scores range from 300 to 850, with higher being better. While every lender sets its own standard for what’s considered a poor, fair, good, or excellent score, here are some generally accepted ranges:

• 300-629: Poor
• 630-689: Fair
• 690-719: Good
• 720 and up: Excellent

Helping your score
Achieving and maintaining a good credit score takes work, and it should be a top priority—even if you’re not ready to for a mortgage loan today. Landlords, insurance companies, and car dealers also use credit scores.

Pay bills on time, keep low balances on credit cards and avoid applying for too much new credit. If your score isn’t where you’d like it to be, talk to your lender about strategies to improve your creditworthiness.