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Credit
Reports
Most people applying for a home mortgage need not worry about the effects
of their credit history during the mortgage process. However, you can be better
prepared if you get a copy of your Credit Report before you apply for your
mortgage. That way, you can take steps to correct any negatives before making
your application.
The following items are some of the ways that you can improve your credit
score:
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Pay your bills on time.
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Keep Balances low on credit cards.
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Limit your credit accounts to what you really need. Accounts that are no
longer needed should be formally cancelled since zero balance accounts can
still count against you.
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Check that your credit report information is accurate.
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Be conservative in applying for credit and make sure that your credit is
only checked when necessary.
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For questions about your credit history you can contact the credit bureaus
that maintain this data: but before you do, you should discuss your credit
report with your loan officer as he or she has extensive experience working with
borrowers with all kinds of credit issues.
Equifax,
Inc.
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Experian
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Trans
Union Corporation
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1600 Peachtree
St.
NW
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34405 W. 12 Mile Road
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2 Baldwin Place, P.O. Box 1000
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Atlanta
,
Georgia
30309
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Farmington Hills
,
MI
48331
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Chester
,
PA
19022
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1 800 685-1111
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1 888-EXPERIAN (888-397-3742)
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800 888-4213
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www.equifax.com
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www.experian.com
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www.transunion.com
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A borrower with a score of 680 and above is
considered an A+ borrower. A loan with this score will be put through an
"automated basic computerized underwriting" system and be completed
within minutes. Borrowers in this category qualify for the lowest interest rates
and their loan can close in a couple of days.
A score below 680 but above 620 may indicate underwriters will take a
closer look in determining potential risk. Supplemental documentation may be
required before final approval. Borrowers with this credit score may still
obtain "A" pricing, but the loan may take several days longer to
close.
Borrowers with credit scores below 620 are normally locked into the best
rate and terms offered. This loan type usually goes to "sub-prime"
lenders. The loan terms and conditions are less attractive with these loan types
and more time is needed to find the borrower the best rates.
All things being equal, when you have derogatory
credit, all off the other aspects of the loan need to be in order. Equity,
stability, documentation, assets, etc. play a large role in the approval
decision. Various combinations are allowed when determining your grade, but the
worst-case scenario will push your grade to a lower credit grade. Late mortgage
payments and Bankruptcies/Foreclosure are the most important. Credit patterns,
such as a high number of recent inquires or more than a few outstanding loans,
may signal a problem. Since an indication of a "willingness to pay" is
important, several late payments in the same time period are better than random
late payments.
 
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