The article below is a transcript of a video originally posted to my YouTube channel on March 30th, 2022.

Hey guys, it’s Ray here. I wanted to talk to you about, a little bit about a question that came up after my last video about mortgage FICO scores, what they are, why they are important, and how to find it. I got a really good question and it was, “How do I increase my mortgage FICO score? My FICO 8 score keeps going up but my mortgage scores are not. What do I do?” So today I’m going to tell you the five things that you really need to look at most to help increase your mortgage credit score.

Unfortunately, the bureaus don’t really tell you exactly step by step what they’re gonna do, and each FICO score is gonna be weighted a little bit differently. So, the best thing you can do is… do the five things you would normally do for trying to build your regular credit score (your FICO 8 score).

Number one, you’re gonna look at your payment history. Payment history is so important. It is actually on average about 35 percent of the weight in general. I know I just said you don’t know for sure, but we do know at the very least that payment history is one of the most influential aspects of any credit score. So, keep making your payments on time and don’t miss a payment. If you miss a payment, that’s like a three-year mistake that you will be paying for, for three years until it falls off—possibly even, depending it’ll— so it like weights for three years, but it shows on your credit report for up to seven years, so don’t do it. Don’t miss a payment. Don’t do it!

But not only that, payment history isn’t necessarily the only thing. The second highest weighted is the amount you owe. So, how much of your credit has been utilized? Okay, they’ll say credit utilization, that’s going to weigh about 30 percent, so that’s pretty close. That’s right up there with payment history. So do you have all your credit cards maxed out? Do you already have a mortgage? Do you have an auto loan? They’re going to look at—okay—how much total credit? What’s your total credit allowance?

So you have a five thousand dollar credit card, and another five thousand credit card, and you have a another five thousand dollar credit card. That’s fifty-thousand dollars in possible in credit lines that are open. Well, do you owe a hundred dollars of that back or do you owe 85 percent of it back? You know, so really ideally, conventional wisdom on—and I’m really big on this—conventional wisdom on amounts owed is that you should keep it at 30 percent or below. And, I actually got into a really big argument with somebody in my family about this, because they just couldn’t comprehend that that’s actually really bad advice. And, I told them to look, “Look, don’t carry a balance”. Don’t carry a balance at all. Yeah, your score will be lessened if you keep it at 30 percent or below, but you know what’s better than that 30 or below? ZERO. Zero is better.

So if you want a really good score, pay your credit card off monthly before the statement closing date. Because when your statement closes it’s going to be reported to the credit bureau and whatever is shown that you owed on your statement is going to be reported on your credit report. Pay off your balance before the statement closes every month. Don’t carry a balance.

Number three. They’re going to look at your credit history. Credit history is not just made up of payment history and missed payments. Credit history is going to look at the mix of credits you have—you have a bunch of revolving credit lines? Those are things like credit cards, things that continually go on and on and on and on. Some people might have a—these are this is more rare—but they have like a personal line of credit; where it’s not a credit card but you can just go to the bank and you can just pull out cash right away. That would be often considered a revolving line of credit. Do you have installment loans? Those are going to be things like car loans. That’s what most people are going to have an installment loan for—they might have it for something else though. Have you had mortgages in the past? They’re going to look at all these things. They’re going to look at your payment history on these. They’re going to see all the different types of credit you have handled and say, “Hey, they handled all of these really well. They’ll probably be able to make this payment back.”

Now that said, if you were planning to buy or apply for a mortgage within a year, don’t go and run out and get an installment loan right now. Because, that will drastically reduce your credit score and it will take much longer to get that score back up after you get a new loan. So if you are looking to get a mortgage in the far term and then maybe, okay, maybe go ahead and get an installment loan. But think about it. Think about where in your grand plan that that can play into and if it’s not the right time or not.

Also, credit history—actually you know what they they have credit mix and credit history—I guess credit mix was supposed to be like 10 [percent] but I consider it kind of a similar thing, because credit history I guess—they’re looking at how long you’ve had credit for. Is your oldest account a year old is it 10 years [old]? I’ll be honest, anything under like 10 years they’re going to be like, “What?“. You’re going to think—it’s going to feel like a long time to you but to the credit bureaus it’s still kind of newer. So 10, 15, 20 years—that’s gonna look better. I opened my first credit card at 18 and it was only until now— I’m 32 now—it was only until now that they really said, “Oh yeah, you’ve had this card for 12 [or] 13 years. That’s a good amount of time.” Credit takes a long time to build you guys, so get into these good habits. Take care of them now. In the years to come you will thank yourself.

The last thing that they look at is new credit. And—I kind of touched on this before—new credit, whether it’s a credit card, or a mortgage, or an auto loan, or anything in between— they’re gonna see, “Oh, they applied for credit”. That credit score is going to go down now because you’re at higher risk. If you’ve just recently had a loan, then you’re—[it’s] more likely that you’re going to need money and less likely that you’re going to be able to make more payments later on. So, that’s why I said, “If you’re looking to get a mortgage in the near future, don’t go out and get a new loan”. That would be a really, really, really bad idea.

That said, those are the five different things that you can really do—to start working on today— to set yourself up to get your best chance of increasing your mortgage scores, and even your regular credit score [FICO 8 score]. Honestly, sometimes it just takes time. It just takes time. Get in those good habits and you will get where you want to be. If you like this video please go ahead and let me know in the comments below. Tell me what your thoughts are, [or] what your experiences are. I’d love to hear from [you] and I’ll see you next time