Payment History 35% Amount Owed 30% Length of Credit History 15% New Credit 10% Types of Credit in Use 10%
No big surprise: Your payment history is the biggest factor in determining your credit score.

It’s no big secret.

You must have a fairly good credit score to score a mortgage. And the better your score, the lower the interest rate you’ll have to pay.

For a lot of people, a credit score is one of those magic black boxes. Your whole life goes in one side. Magic happens, and your credit score comes out the other side.

This post is the first of two dealing with credit score. It shows you what comprises your credit score and gives a few useful tips on managing or improving your score.

With that said, I have to reiterate what it says at the bottom of every page on this site:

We at Hermit Haus are real estate investors. We are not CPAs, lawyers, or financial advisors. If you need help with your credit score, please consult a professional.

For most people, payment history is the biggest part of the credit score. According to mortgage broker Jordan Weimersheimer, the relative importance of these categories can vary for different groups of people—for example, those with a short credit history.

Here are a few tips to maintain a healthy credit score:

  • Pay your bills on time. Find a system that helps you keep track when you need to pay. I use a 31-pocket accordion file.
  • Maintain a cash cushion to prevent unexpected expenses from derailing your timely payment system.
  • Keep a low balance on your credit cards. It’s better to have a low balance and a high limit.
  • Let your old accounts stay open. The age of these accounts can help your score.
  • When you shop for credit, do it quickly. Each credit inquiry can adversely affect your score.
  • Don’t open new accounts just to get a discount on a purchase. You usually end up paying more in higher interest than you save.
  • Use your credit. You need several accounts to even get a credit score. Just make sure you can pay the bills.

Next time, I’ll talk about how Hermit Haus may be able to help repair your credit score.


If you have any questions, feel free to call us at 512-807-8777.