There is more to just a number when it comes to your credit score. With regards to mortgages, lenders will not only consider the score itself, but they’ll also look at the payment history, outstanding balances, minimum monthly payments, how many sources of credit are on the report, and the length of each credit account.
At minimum, lenders like to see what we call, “two years and two trades”. Even though a credit score may be within the ‘good’ or ‘great’ range, the credit may be considered ‘thin’. With thin credit, there is typically less than two years of credit history shown on the credit report, or there may only be one credit source from a major banking institution.
Lenders like to see credit sources from major banking institutions to prove history of repayment. These include but are not limited to credit cards, student loans, car loans etc. If you’re considering getting rid of a credit card, try and lose the card you have owned for the shortest amount of time. The cards you have owned the longest help improve your credit score (assuming you pay off the balances of course!)
Using credit is a double-edged sword! Make sure you plan your finances accordingly so you don’t end up wasting your hard earned money on paid interest!
“Your reputation is like a credit score. Everything you do can affect it.” – Michelle Parsons