Credit scores help determine the type and size mortgage loan for which you qualify. The score is basically a summary of your credit report, in the form of a numerical measurement that reflects your management of credit.

Based on information collected from your creditors by the credit bureaus, the score takes into consideration:

• Your payment history
• The amount of credit you have
• Information reported monthly by your creditors
• Any serious past problems with debts (i.e., liens, bankruptcies, collections, judgments)

The credit scoring process crunches this information through a computer matrix and converts these and other factors into a single three digit number that aids in determining the likelihood you will repay a loan on a timely basis.

Mortgage credit scores used in lending typically fall in the 300 to 900 range. Generally, the higher the score, the less risk of default the borrower presents to the lender. However, credit scoring is only one factor considered by a lender when underwriting your mortgage loan and only after careful analysis of all the information, collected from your application, will a final decision be made.

Even if you are already pre-qualified for a mortgage, you can benefit from knowing your credit scores. While the pre-qualification measures debt and income ratios to "predict" the loan amount for which a person may qualify, the credit score provides a clear indication of your credit standing - a major factor during the final loan approval process. A low score may necessitate a decreased loan amount, a higher down payment, a change in mortgage type, or possibly even denial of your loan altogether.

35 percent of your score is based on your payment history. On time payments make the biggest impact on your score. On the other hand a recent single late payment can have a very large negative impact on your score.

30 percent of your score is based on outstanding debt. The amount of credit you are currently using measured against your available credit or credit limit on your installment loans (car loans, furniture loans, etc.) or revolving credit (credit cards). The lower the balance vs. the credit limit, the better score you will have. Most experts agree that using no more than 25% of your available revolving credit is best for your score.

15 percent of your score is based on the length of time you've had credit. The longer you have had positive credit, the better the score. Since the credit report is a tool used to determine the credit risk you present, a long history of good credit is a good indication that you will continue to pay your bills on time.

10 percent of your score is based on the number of inquiries for new credit is on your report. Inquiries that show that you are applying for credit in every store you visit are not good for your score. Most inquiries stay on your report for one year before falling off. Besides basic identity theft issues, this is why it is important to carefully control who has enough of your information to pull a credit report on you.

10 percent of your score is based on the types of credit you currently have. While credit experts disagree on the right combination of installment loans to revolving credit you should have, each credit bureau system has its own ideal mix.

While mortgage loans are available for borrowers with credit scores as low as 500, the lowest score at which most mortgage products will be offered is 620. Borrowers with scores of 720 and above will qualify for the best loan programs available and will be offered the lowest rate.