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Credit & Finances

Mastering your financial profile for mortgage approval.

Credit Score Breakdown

Your FICO score is calculated based on five main factors. Knowing these can help you boost your score.

Payment History (35%)

The most important factor. Even one late payment (30+ days) can drop your score significantly.

Amounts Owed / Utilization (30%)

How much of your credit limit you are using. Aim to keep credit card balances below 30% of their limits (e.g., $300 balance on a $1,000 card).

Length of Credit History (15%)

Longer is better. Avoid closing old credit card accounts, as this shortens your history.

Debt-to-Income (DTI) Ratio

Lenders use DTI to determine if you can afford a monthly mortgage payment. It is calculated by dividing your total monthly debt payments by your gross monthly income.

Formula
(Monthly Debts + New Mortgage) รท Gross Monthly Income = DTI

What's a Good DTI?

  • 43% or lower: Generally preferred for Qualified Mortgages.
  • Up to 50%: Possible with FHA loans or strong compensating factors (like high cash reserves).