|Get the credit & loan you
Julie Garton-Good, GRI, DREI
We all know that creditworthiness is important; one of the most detrimental
times for credit to fail is when you're trying to get a mortgage loan.
So let's look at what the lender considers to be good credit--and grab a
pencil--we'll give you information on how to obtain your own, free
credit report before you apply for that mortgage.
The credit report can tell a lot about the character, capacity and credit
history of the borrower. It shows the lender how much debt the borrower carries,
how leveraged he or she is as well as if those debts are paid on time.
Just what is good credit? Mortgage lenders generally use the following as a
guide. On credit cards and other revolving debts, the borrower could have up to
two payments that were thirty days late during the past twelve months (with
explanations, of course.)
On installment loans (such as car loans), the borrower could have only one
payment 30 days late and still have good credit.
Most lenders won't tolerate a history of late mortgage or rent payments.
Does it mean that someone with credit damaged by illness or periods of
unemployment, couldn't get a mortgage? It depends. The lender will evaluate each
situation on a case-by-case basis. If the lender feels that the situation was
outside of the borrower's control--is not likely to happen again--and credit has
been rebuilt, the lender may still make the loan.
How can you check your credit? It's wise for you to obtain your own consumer
credit report approximately two to four months before applying for a mortgage.
There are three major credit reporting systems in the United States--Equifax,
TransUnion and TRW. You can look in the yellow pages for locations near you--or
you can call each company's toll-free number to order your report by mail.
In fact, TRW offers you a free, complimentary credit report just by calling
1-800-392-1122. This automated system will tell you how to order your report by
mail and you should have it in approximately three weeks.
Even if house hunting isn't in your immediate future, do get a copy of your
own credit report and review it. It's vital for financial well-being and your
peace of mind!