Your Credit History and Applying for a Mortgage
One of the main determinants in your qualification for a
mortgage is the information in your credit report. Your credit
history is what lenders look at to decide whether or not to
give you the credit you request for home finance. The lender
needs to trust that you will be able to pay the dues on an
ongoing basis, and can be relied on to eventually pay back
the entire loan. If you have bad credit, such as outstanding
balances or suspicious remarks on your credit report, a mortgage
lender is likely to reject your application with the assumption
that you will not be able to reimburse the credit they remit.
First you should know what a credit report contains and how
to evaluate it correctly. Before looking for your status with
the credit companies on your report, you need to review your
personal information that may include legal name, addresses
history, aliases and social security number. Make sure that
the information is correct and up to date.
Credit cards with retail stores, auto loans, other types
of credit cars and auto loans are called merchant trade lines
or credit lines. You will be able to see the date the account
was opened, the original balance, the current balance and
any late payments or absence of payments. To make sure you
have knowledge of your complete credit history and status,
find reports from all three major credit bureaus.
You will also see court records that show any history of
bankruptcy, judgments against you, liens and satisfied liens
and divorce history. A credit report also contains information
showing your credit inquiries in the past. It will show when
and how often you have reviewed your credit, as well as credit
card companies’ inquiries. Only inquiries within the
past 24 months are recorded.
Your credit report won’t tell your race, salary history,
stocks and bonds, personal assets, criminal record, personal
background, sexual orientation, medical history, checking
or savings accounts in the past or present, or school history.
Like with any application for credit with any company, you
will probably be turned down for a mortgage if you have poor
credit or an unclear credit history. You need to check your
credit report often and make sure it is up to date and accurate.
Know that errors can happen, so if you think some of the
information may be incorrect or you cannot remember, call
your credit grantors and double check. Identity theft is a
risk, so make sure you tear up receipts or documents containing
information such as your social security number or credit
account numbers. It is possible that someone may obtain your
personal information and illegally charge things to your name.
Last but not least, have some relief that credit history
is not everything! Credit lenders such as Chase Manhattan
Mortgage understand that your history does not determine your
future credit potential. We care more about our relationship
with you and helping you achieve your financial goals and
aspirations as a homeowner. We are here to help, so do not
be discouraged if you do not have a completely clean credit