Mortgages and Credit Reports:

Many homebuyers tend to worry about how their credit report will affect their ability to take out a mortgage and buy a home.

You can prepare yourself by obtaining a copy of your credit report and reviewing it before you apply for a mortgage loan. This way, if any errors appear on your file you can take steps to correct them before you apply for the loan. The 3 major credit bureaus are:

• Equifax - 800-685-1111
• Experian - 888-397-3742
• Transunion - 800-888-4213

If you've had credit problems in the past, be prepared to discuss them honestly with a mortgage professional and come to the application meeting with a written explanation. Responsible mortgage professionals know that there are legitimate reasons for credit problems, such as unemployment, illness or other financial difficulties. If you've had a problem that's been corrected, and your payments have been made on time for a year or more, your credit may be considered satisfactory.

ABC's of Mortgage Credit
The mortgage industry tends to create its own language and a credit rating is no exception. "B" and "C" types of mortgage lending gets there name from the grading of one's credit based on such things such as payment history, amount of debt payments.

Other Things Being Equal - When you have derogatory credit, all of the other aspects of the loan need to be in order. Equity, stability, income, documentation, assets, etc. play a larger role in the approval decision.

Going Once, Going Twice - Credit patterns are very important. A high number of recent inquiries and more than a few outstanding loans may signal a problem. A "willingness to pay" is important, thus late payments in the same time period is better than random lates as they signal an effort to pay even after falling behind.