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Your credit ranking can have the single most important impact on your ability to buy a home for sale in Northern Virginia and on your ultimate monthly payment. A slight increase in the interest rate that you pay could add tens of thousands of dollars to your payments over the life of a loan. If you are confused as to what factors contribute to your credit ranking, you have plenty of company. Consumers have only had open access to their credit rankings for a short period of time, so people are just beginning to learn how those scores are calculated.

The three national credit-ranking companies each use their own proprietary scoring models. Let's examine the most widely used one from Fair, Isaac Company (FICO), which was the first credit scoring model used in the industry by TRW, now know as Experian, a leading credit reporting agency. The FICO model gives approximate weights to the following categories in your credit records and has the greatest impact on your ability to buy a home for sale in Northern Virginia:

Payment History (35%) Most consumers believe that if they've paid everything when it is due, they have little to be concerned with. But don't count on it. This part of the score carries the highest weighting, but it's unfortunately the one that contains the most inaccuracies, including posting errors by the credit reporting companies. Errors on your credit report that haven't been corrected can cost you precious score points without your knowing it. For this reason, you should check your credit files with all three national credit agencies every single year.

Amount Owed (30%) This rates the number and types of accounts, total open accounts and distribution of debts among accounts. The rating here is based not only on the amount of credit available to you on open lines, but also on how much of that credit you've already used. A majority of accounts with high balances may hurt you. Any creditor looking at this information would also want to compare your income to the amount of debt you carry. Keeping a large number of accounts with zero balances also can lower the credit score because it increases the possibility for someone to live beyond his or her means.

Total Time of Credit History (15%) The more time the positive credit history on an account, the better the score. That's why if you decide to close out credit accounts, it may be wise to close the newer accounts and keep the older ones with a longer positive track record.

New Credit (10%) Opening several accounts over a relatively short time likely will have a negative impact on your score. It's a potential red flag to creditors to see many accounts, especially credit cards, opened within a short period of time. It could signal that you anticipate an income shortage and are preparing by obtaining credit to live on. A score can even be affected if the borrower transfers a balance to a new lower-interest-rate credit card.

Credit Mix (10%) Your mix of credit cards, retail accounts, finance company accounts, installment loans and mortgage loans. A good mix of types of accounts is good here, whereas too many of one type could shave points off the credit rating.

Understanding your credit rating is just on part of the Northern Virginia Home Buying Process We hope that this information has shed some light on how credit bureaus calculate your score. There are numerous Northern Virginia Home Buying Guides available for you. Select the one that is right for you.

The Earl of Real Estate - Robert Earl is a Real Estate Entrepreneur & Real Estate Coach based in the Northern Virginia Real Estate Marketplace. Robert has compiled a list of The 77 Most Affordable Northern Virginia Homes for Sale as a free service to Northern Virginia Real Estate Buyers & Seller.