Examining Your Credit History

 

As indicated earlier, your credit report and history are key to obtaining your home loan. We encourage you to view your credit report yourself, prior to the lender’s viewing of it, by contacting one or all three of the major credit reporting companies: Equifax, Experian, and TransUnion. All you have to do is call and request it. Once you receive it, check the “high credit limit,” “total loan,” and “past due” columns. It is a good idea to get copies from all three companies to assure there are no mistakes since any of the three could be providing a report to your lender. Fees, ranging from $5-$20, are usually charged to issue credit reports.

 

• Experian (800) 682-7954 experian
• Equifax (800) 685-1111 equifax
• TransUnion (800) 888-4213 transunion

You can also get a copy of your credit history at the following online location:

 

 

You can correct simple mistakes by writing to the reporting company, pointing out the error, and providing proof of the mistake. You can also request to have your own comments added to explain problems. For example, if you made a payment late due to illness, explain that for the record. Lenders usually understand about legitimate problems.

 

Prior to the late 1990s, credit scoring had little to do with mortgage lending. When reviewing your credit worthiness, an underwriter would make a subjective decision based on past payment history. Then things changed.

 

Lenders studied the relationship between credit scores and mortgage delinquencies and found a definite relationship. Almost half of those borrowers with FICO scores below 550 became ninety days delinquent at least once during their mortgage. On the other hand, only two out of every 10,000 borrowers with FICO scores above eight hundred became delinquent.

 

Depending on your area’s housing market, lenders sometimes will allow you to stretch their allowable debt ratios. One of the best ways to encourage your lender to do so is to increase your down payment, as indicated in the following chart:

 

Underwriters sometimes also will stretch the ratios for other “compensating factors,” including: