Credit Reports As They Relate To The Mortgage Application Process

 

Your credit history represents one of the three big Cís in the mortgage application evaluation process - Credit, Collateral, and Capability (financial criteria). A mortgage underwriter will carefully analyze your credit report and score to determine if your past payment history warrants confidence in the risk to lend, what probably will be the largest loan of your lifetime.

Because of the importance of the credit report in this process, PMC highly recommends that you obtain a copy of your report before you start looking for a home. Even if you are confident that your credit history is excellent, we still recommend it. Our experience working with many customers over the years is that there are many errors on people's reports. The time to discover such errors is now and not in the middle of your purchase transaction.  See "Ordering Your Credit Report".

If you are aware of some credit problems, delinquencies, bankruptcies, child support/alimony arrearages, etc., it is important to discuss the situation fully with your mortgage broker. A professional mortgage broker knows that there can be legitimate reasons for derogatory payments such as unemployment, medical conditions, death, understandable sharp declines in income, etc. The mortgage broker can evaluate the impact of such information and advise you if it is likely to create an obstacle to having your mortgage application approved. The broker can also advise you how to improve the situation and recommend the appropriate loan program best suited to your credit history.  See Credit Scoring & Grading.


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