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 history.