Does your credit report have skeletons hiding in the closet? Many are startled at what is lurking on their credit report when they’re getting ready to buy or refinance their home.
If you’re a long-time subscriber to Mortgage Porter, you’ve probably read some of my tips on how to improve your credit score. Here’s a quick overview of five frightening credit report surprises.
Your on-line credit score may not be what it appears. Your credit report and scores are available on line by the “big three” credit bureaus. However, don’t be fooled by your on-line credit score which probably is a different number than what a mortgage company (or other lender) will pull. Why? Basically, there are different scoring modules created for the end user (for example a mortgage company or if you’re buying a car).
Credit inquiries lingering behind. Your credit report will reveal inquiries that were made over the past 120 days. Each inquiry will need to be addressed with a written letter explaining each inquiry and whether or not new credit was obtained. If new credit has been obtained and needs to be added to the loan application with the debt being factored into the debt to income ratios.
Co-signed college student loans. If you co-sign for your childs student loan debts (or any debts) chances are you may get to qualify factoring that debt into your ratios. This can sometimes be resolved if you can document your child (or whoever you co-signed the debt for) has made payments on their own for the last 12 months.
Charge-offs. Consumers often assume that because a debt has been “charged off” that they’re off the hook for the remaining balance, which typically is not true. Lenders will often treat the balance of the charge off that is on the credit report as a “collection” which will probably need to be paid off or resolved prior to obtaining a new mortgage.
Disputed accounts. You disagree with what is being reported against you on your credit report and do what most responsible people would do: file a dispute. Only to find out when you’re getting a mortgage, that the lender will not close on your transaction unless the reported dispute is removed. Torture!
What may be buried in your credit report is just one more reason why you should start your loan approval process sooner than later.
If you’re considering buying or refinancing a home anywhere in Concrete, Fall City, Forks, Auburn (originally incorporated as the town of Slaughter) or anywhere in Washington state, I’m happy to help you!