Accurate Credit Reports
Credit – why we need to insure our credit reports are accurate.
A lot of the mortgage process is credit driven. The first question mortgage originators usually ask is how is your credit? Don’t let that scare you! There are many different types of mortgages available to suit everyone’s needs. So when you hear the word credit what we are referring to is what is on your credit report. Most people have no idea what their credit report looks like. When starting the house buying process the first thing you should do is speak to a mortgage originator. A mortgage originator can pull your credit report and explain to you what the underwriter will be looking for.
Here are some credit report myths:
1) Paying my debts will automatically improve my credit score. It is good to show that you can handle credit. So you don’t want to pay off all your debt to zero. However if you are late on payments or have accounts in collection, it is a good idea to be sure everything is paid up to date. You can not automatically erase bad credit, but paying it off will improve your credit score in the long run.
2) Credit Counseling always destroys my credit score. Not true. It is okay to attend a credit counselor’s debt management program. However if they are looking to negotiate a lesser contractual obligation for you, check with the lender to see how they will report that to the credit agency.
3) Canceling credit cards boosts my score. Open accounts do mean availability to potential debt. However an underwriter does like to see three available trade lines that show good payment history, along with rental history.
4) Too many inquiries hurt my score. Once upon a time, this statement was true, but not anymore. A credit agency will recognize a shopping mind-set when they see a batch of mortgage or car loan inquires arriving within a 30 day period.
5) Checking my own credit report harms my standing. Personal requests do not reflect negatively on the evaluation. However when a credit bearing institution requests a copy of your credit it will knock your score a couple of points.
6) Fico scores are locked in for a period of time. Not true, any time data on your credit report changes your credit score will change along with it be it good or bad.
7) I don’t need to check my credit report if I am paying my bills on time. Not true. 80% of all credit reports can have erroneous information ranging from wrong birth dates to accounts you never applied for. A lot of times medical bills can show up on your credit report that you assumed the insurance company had paid for.
8) A divorce decree automatically severs joint accounts. A judge may have rubber stamped your plans to divide credit cards and car payments however, that carries no legal weight with the creditors themselves. If your ex is responsible for a credit card payment and is late on it, if your name still appears as jointly on the debt, it will reflect on your credit report as well. Divorcing parties should contact the creditors and either close the current accounts or have the booted name sign a letter of consent for this action.
9) I can always pay someone to fix or repair my credit. Yes if you are looking to clear up erroneous information posted to your account. However, if you were late on a credit card or car payment, then that is the hard fact.
Amy Seils is a Mortgage Originator For JP Morgan Chase Bank. For any questions regarding mortgage please call Amy at (585) 241-6908. or e-mail her at Amy.L.Seils@chase.com