Your credit history alongside income is where a lender takes their first look at a borrower. Your credit history is pulled from these three credit reporting agencies which are TransUnion, Experian, and Equifax. These agencies generally will only report credit dating back over the past ten years.
There are always exceptions to rules of course but if you see information on your credit report that maybe negative but older than ten years you can send a request to the reporting agency to have it removed. If there is information that is over ten years old on report and is in standing, than it is wise to leave it alone. The longer an account has been open even with a zero balance and no activity these accounts are still considered beneficial in factoring your score. Do not close out these accounts as doing so could have a negative effect on your score.
A negative item on your credit report can always be challenged. Many times items show up on a person’s report that does not belong to them. Generally people with similar names may experience these issues more often than others. Keeping good records of your payments can prove very valuable when you have a need to challenge an improperly reported item. Remember the most important factor is not missing any payments. The information in your credit report is collected from various companies that provide data about your credit. These companies have to follow specific credit reporting rules, as listed under the federal Fair Credit Reporting Act.
Once you have challenged any improperly reported items on your credit reports, you will find your report credit score is based on accurate information and there is no quick antidote in drastically improving your credit score. Most often this is something that takes time since a portion of your credit score is based on longevity.
However, consumers may have a chance to improve their score anywhere from 10 to 25 points by paying down some debt on certain accounts.
Talk to us at Solutions First Mortgage Inc. before doing anything to your credit if you want to apply for a mortgage loan. Our credit experts will review your reports and find the right balance between our different lenders’ loan programs. It is our goal to get you on the correct path for your mortgage loan as there can be parameters as to which loan programs you can qualify for due to various factors.
Why is this important? Your interest rate you are offered by the lenders is based on several factors of which two of them are credit score and Debt to Income Ratio (DTI). Let’s take a look at someone who may have a good credit score of 710. If a lender requires a 720 for a ¼% lower interest rate, improving your credit score 10 points can have a major impact over the life of your loan. Your DTI can have major impacts as to which loan programs you may qualify for. For example the difference between a conventional loan and a FHA loan for the same $100,000 could have an increase as high as $125 per month towards your payment.
At Solutions First Mortgage Inc. we believe there is more to the mortgage loan process than just pulling your credit and verifying your income for a loan. It is about taking the time to look at your overall financial picture, so we can find the best options for you to choose from and arrive at the solution to turn your dreams into reality.
For further information about getting the right mortgage for you and to arrange your ‘NO-FEE ASSESSMENT’
CALL US on (+1) 941-921-1110