Understanding Your Credit

This is the first in a series of videos and articles inspired by Mars Bank’s First Time Homebuyer live events. Contact a mortgage expert to learn more about programs for first time buyers


Establishing credit takes time so start now. Starting as early as possible before your home search can make a big difference. A key factor is understanding what your credit means. A credit score is calculated from the software system developed by Fair Isaac Corporation, otherwise known as a FICO score.

FICO Score

To have a FICO score you must have at least one account open and reporting for at least six months. The credit score range is from 300 to 850. The higher your credit score, the more favorable terms that you will receive on your mortgage loan. Borrowers have found that when they do have that higher credit score, they’re able to get a better rate.

How to Get and Keep a Good Credit Score

There are four key factors when it comes to how you can get good credit and how you keep it.

  1. The first one is paying your bills on time every time. That’s the biggest factor in having a good credit score.
  2. The second is called credit utilization. This is your total balances outstanding compared to your available credit or your credit limit threshold. You want to keep that below 50%.
  3. The third is age of credit. Older credit accounts help establish better credit because there is a longer history of (hopefully) on time payments and management of the account.
  4. Finally, the fourth key factor for a good credit score or to improve your credit is by paying off all derogatory accounts. Even small collection accounts – pay them off. Those can have a big effect on your credit.

Legitimate Credit Score Service

You can check your credit by utilizing a legitimate credit scoring website such as annualcreditreport.com. This website is recommended because it tracks data from all three credit bureaus. Once a year, at no cost, you can see your credit report from each of the three bureaus.

Contact Mars Bank today (secure form) with questions about understanding your credit! We are here to help support you with any credit questions you have.