How credit scores are calculated

home on a stack of cash

Today we have guest content provided Michael Timmons, NMLS# 894265, Mortgage Officer with Gibraltar Mortgage Services.

When you check your credit score, you get a number, usually between 500 and 800. But what does that number mean? What is weighed to come up with that number? Here are some facts about how your credit score is calculated.

  • There are 5 factors that are used to come up with the number you know as your credit score. 35%-Payment History, 30%-How Much you Owe, 15%-Length of Credit History, 10%-New Credit, 10%- Credit Mix.
  • Payment history is a heavy hitter here! Demonstrating on time payments is critical for good and above average credit scores. Multiple late payments especially in reference to a mortgage loan, can be extremely hard to fix down the line. That is why on time payments are so important.
  • The amount you owe is also a heavy hitter. Did you know: when it comes to revolving credit (aka credit cards), your balance to limit ratio shouldn’t be more than 30%. When you allow the balance to go over that 30%, your score will be affected! Low balances=better credit scores.
  • Length of credit history is sometimes something you cannot help, so it is weighed less than the first two. Young credit isn’t necessarily bad, it’s just young! Someone who is older and has lots of history can be approved quickly. Whereas younger credit, may require a co-signer or guarantor.
  • When it comes to new credit, the amount of new accounts opened is being referenced. Sometimes, multiple new accounts in a short period of time could be viewed as a risk! That is why it comes into play here.
  • Credit mix means just that. Having a well-rounded credit report means having a bit of everything. Revolving credit, installment loans, a mortgage, line of credit, all of these would be a part of a well-rounded credit report. Showing creditors that you are able to handle all kinds of credit is important to proving that you will present minimal risk.

In conclusion, your credit score is important in 2018! And building good credit is a lot easier and faster than fixing bad credit. Understanding why this number matters and what goes into creating your credit score is the key to making sure you are able to borrow what you want (and sometimes need) without issue.

A big thank you to our guest contributor Michael Timmons, NMLS# 894265 Mortgage Officer, Gibraltar Mortgage Services.  Give Michael a call  if you have Mortgage questions at 281-364-7879 or email him at

I look forward to helping you to… LIVE LIFE TO THE FULLEST, Scott Culberson, Broker Associate, Better Homes and Gardens Real Estate Gary Greene,, 281-467-4691


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