How is Your credit score determined?

When it comes to buying a home, this all-important number is crucial in determining your ability to obtain financing. Lenders want to know your potential risk before deciding whether to give you a loan.

Your credit score is a good indicator of how you’ve handled your finances in the past. Although your score is not the only factor that lenders use when analyzing a loan application, it plays a huge part in determining what kind of financing you qualify for and can even impact your interest rate.

Fair, Isaac and Co. introduced the FICO® score in 1981 as a tool to measure anticipated default risk. The FICO® score has become the industry standard and is used by more than 95% of the top mortgage lenders.

The higher your credit score, the lower your perceived risk of defaulting on a loan. While there is no “magical” number that you need to get approved, a score of 700 or above is generally good. It’s important to remember that lenders may have different credit score criteria based on the type of loan you’re looking for as well or other factors.

Credit scores are based on data gathered by various credit repositories from creditors, collection agencies and public records. These repositories (such as Experian, Trans Union, and Equifax) then derive scores based on their own proprietary models. Scores generally range from 300 to 850 and are based on many factors. Here’s a breakdown of what generally goes into calculating credit scores:


  • Payment history – Have you paid your bills on time? Do you have collections, judgments, etc.? Recent late bills will have a greater impact than older ones.
  • Amounts owed – How much do you owe on your accounts overall? How close to the limit are you on each account? The closer you are to your overall “capacity” can lower your scores.
  • Length of credit history – How long have your accounts been established? How long has it been since you’ve used certain accounts? In general, the longer your history, the better your scores are.
  • New credit – Have you opened multiple new accounts recently? While opening new accounts once in a while is fine, a bunch of new ones in a short amount of time may be considered a risk factor.
  • Variety of credit used – Do you have credit cards, retail accounts, installment loans, mortgages, etc.? Having multiple types of accounts is considered a good indicator of a well-rounded credit history.

Now that we’ve covered the basics of credit scores, you can also learn about how to protect and maintain your credit! Check out our previous blog post for some helpful tips!

For financing information contact TBI Mortgage at 1-800-647-9735 or visit

This Post Has 2 Comments

    1. Toll Brothers

      Hello Yukio Utada, thank you for your comment and interest in Toll Brothers! We are happy to hear that you’re interested in our future community – Oaks at Lafayette Hill in Pennsylvania. Our Pennsylvania Online Concierge team will be able to add you to the VIP list, which will allow you to receive updates about the future of this community. We have passed along your contact information to the team, but you can also reach out to them at 855-872-8205, or

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