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Every mortgage company determines credit worthiness of a borrower in a slightly differently manner. In many cases, mortgage lenders use several different measures to determine a borrower’s eligibility for a home loan. Some of the aspects of your credit that will be considered include payment history, amount of debt payments, bankruptcies, equity position, and credit scores. Your mortgage lender will help you help you further understand your credit rating and the impact it will have on your ability to obtain a home loan.
Due to the Fair Credit Reporting Act, only you and those businesses that have a “legitimate business need” and a “permissible purpose” can view your credit profile. Unless you have given written consent individuals such as family members, neighbors, and co-workers are not allowed access to your credit profile. The businesses that generally have access to your credit information are credit grantors, collection agencies, employers, and insurance companies. Any company that receives a copy of your credit profile will be listed under the "Inquiry" section of your report.
Your credit profile provides mortgage brokers with information that will assist them in determining if you are eligible for a home loan. While this profile provides lenders with plenty of valuable information it is important to know that your race, religion, health records, criminal records and political preferences are not included in this report. Your credit profile provides information only about your employment history, credit information, public record information, and other inquires that have been made in the past.
All mortgage lenders evaluate the risk associated with loaning a borrower funds. Mortgage brokers also assess many factors when borrowers apply for a home loan; one important factor is an individual’s FICO score. Your FICO score is a numeric representation of your financial responsibility and this number is based on your credit history. A scale is used to measure FICO scores and the number can range from 300 to 850. The higher the FICO score the less risk associated with extending credit to that borrower. FICO scores are provided to mortgage companies by the three major credit reporting agencies: Equifax, Experian, and TransUnion. The scores from these three agencies are used to evaluate your home loan application.
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