Your credit score is a complex and confusing issue.  Well, maybe you understand it but  I’m completely baffled by the whole thing.  Luckily, I attend various seminars and conferences through the Colorado Association of Realtors that allows me to listen to the experts speak to these matters in an effort to make sense of it all.  As a real estate practitioner in the Winter Park, Colorado area, I deal with these issues on a daily basis for my buyers and sellers.  Let me enlighten you on what I have learned.

I’m going to directly quote Chandra Hall, who is my expert go-to person for financing questions.  Regarding factors affecting credit score “it is the process of assigning the statistical probability of repayment of debt.  There is a model for the scores that was created by Fair Isaac & Company and are called FICO scores.  The scores range from 300 to 850.  The higher score reflects better credit scores.”

Here is a quick layout of the different pieces of information that go into the equation.  Payment history – 35%, Amounts Owed – 30%, Length of Credit History – 15%, New Credit – 10% and Types of Credit – 10%.  As you can see, payment history has the greatest impact on your credit score.

A wonderful website to visit to obtain your personal credit score is Annual Credit Report.com.  Since there are three reporting entities, it might be a good idea to spread out the inquiry into each entity throughout the year.  Maybe check Experian in January, TransUnion in April and Equifax in August.  There is also a free, downloadable e-book discussing various steps you can take to clean up your credit.

So whether you are purchasing your first home or have many real estate transactions under your belt, it can’t hurt to keep yourself apprised of your credit scores.  I work mainly with second homeowners in the Winter Park Resort area, so financing may or may not be a big issue in our transactions up here in the Rocky Mountains.  But it certainly does help for you to know what is on that record and how you can work to get the best score possible.