| As
indicated earlier, your credit report and history is
key to obtaining your home loan. We encourage you to
view the loan application yourself, prior to the lender’s
viewing of it, by contacting one or all three of the
major credit reporting companies: Equifax, Experian,
and Trans Union. All you have to do is call and request
it. Once you receive it, check the "high credit
limit," "total loan," and "past
due" columns. It is a good idea to get copies from
all three companies to assure there are no mistakes
since any of the three could be providing a report to
your lender. Fees, ranging from $5-$20, are usually
charged to issue credit reports.
Credit reporting companies:
• Experian (800) 682-7954
• Equifax (800) 685-1111
What if I find a mistake in my credit history?
You can correct simple mistakes by writing to the reporting
company, pointing out the error, and providing proof
of the mistake. You can also request to have your own
comments added to explain problems. For example, if
you made a payment late due to illness, explain that
for the record. Lenders usually understand about legitimate
problems.
What about my overall (or FICO) score? What does it
mean?
Prior to the late 1990s, credit scoring had little to
do with mortgage lending. When reviewing your credit
worthiness, an underwriter would make a subjective decision
based on past payment history. Then things changed.
Lenders studied the relationship between credit scores
and mortgage delinquencies and found a definite relationship.
Almost half of those borrowers with FICO scores below
550 became ninety days delinquent at least once during
their mortgage. On the other hand, only two out of every
10,000 borrowers with FICO scores above eight hundred
became delinquent.
When can I stretch the percentages?
Depending on your area's housing market, lenders sometimes
will allow you to stretch their allowable debt ratios.
One of the best ways to encourage your lender to do
so is to increase your down payment, as indicated in
the following chart:
Allowable Monthly Housing Expense
Underwriters sometimes also will stretch the ratios
for other "compensating factors," including:
• Strong cash reserves after close of escrow
• A new payment that’s only slightly higher
than current rent or mortgage payment
• A history of increasing earning capabilities
• A history of an ability to save money
• A large cash down payment
Contact
us for more info on Saratoga Credit Scores. |
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