Home Buying: Your Credit History
Your Credit History:
As part of the loan application process, virtually
all lenders will want to see a copy of your credit
report. The report will list all of your long-term
debts (credit cards, mortgage payments, automobile
and student loans, etc), as well as your payment history.
If you don't have a copy of your credit report, most
lenders will generally require you to pay for a copy
when they process your loan application.
However, most real estate experts agree that it is
a good idea to obtain a copy of your credit report
several months before you apply for a loan. This gives
you a chance to resolve any problems with your credit
before your bank sees it. U.S. Federal law ensures
that you have access to your credit report, which
may be obtained from your local credit bureau or any
of several national firms that specialize in credit
reports.
Late payments:
For most people, problems with their credit report
are likely related to late payments on a debt. If
you were late one month in paying off your credit
card, but otherwise have a good payment history, chances
are most lenders won't be too concerned. But if you
have a history of late payments you'll need to document
the reasons why. A slow payment history won't necessarily
get you turned down for a loan, but you may have to
pay a higher rate of interest or otherwise prove to
the lender that you can repay your loan in a timely
fashion.
Errors on your credit report:
Many people are surprised to learn that credit reports
can often contain errors or inaccurate information.
If this is the case with your credit report, you'll
need to contact the reporting agency or creditor to
have the problem resolved. This can sometimes be a
slow process, so make sure to give yourself time to
clear up the mistake.
Bankruptcies and foreclosures:
There's no getting around it. A bankruptcy on your
credit report is not a good thing. But that doesn't
mean you still can't obtain a loan. Even though a
bankruptcy may stay on your credit report for seven
to ten years, lenders will often consider the circumstances
surrounding a bankruptcy (family illness, injury,
etc.). Moreover, if you have reestablished good credit
since the bankruptcy, a lender will be more inclined
to approve your application. |
