Everyone Knows a
Bad Credit History is Not Good for Your Mortgage Application
A Home Buying Article - by Elizabeth Fox-Wise
It is understood by most mortgage consumers that
a bad credit history will make them a weaker mortgage applicant. Just like a job
applicant with a bad resume will loose the job to the applicant with a good
resume, the mortgage applicant with a bad credit history may have a hard time
finding a mortgage lender willing to finance a mortgage loan.
However, understanding that a bad credit history
will hurt your mortgage application is not enough, the consumer must also
understand what makes a credit history look bad to a mortgage lender.
Things That Make a Credit History Look Bad When
Applying for a Mortgage Loan
The mortgage lender will review your credit
history report to determine the risk level involved with financing a mortgage
loan for you. A bad credit history means that you are a high risk borrower;
whereas a good credit history classifies you as a low risk borrower to the
mortgage lender.
Since the mortgage lender is reviewing your
credit history to asses the chances of you defaulting on a mortgage, they will
be looking at other loans and debts that you have had and your repayment history
with them. Therefore, any debt charge offs, loan defaults, non payment or late
payment reports all look bad to the mortgage lender. You can prevent this by
making sure that you only commit to debt that you can afford and keeping up with
timely payments on your financial commitments.
Another thing that makes a credit history look
bad to the mortgage lender is too frequent of inquiries into your credit report.
When a credit report is full of frequent inquiries into it, this looks bad
because it implies that many lenders have reviewed your credit history for
extending credit and have turned you down. For this reason, if you get denied
for a credit card, do not keep applying for every credit card you can find in
the hopes that one will approve you. They all follow pretty much the same
approval guidelines and all of those credit inquiries will look bad to the
mortgage lender.
Before Applying for a Mortgage, Review Your
Credit History for Mistakes Making It Look Bad
All too often mistakes are made on people's
credit history reports. Sometimes these mistakes give an erroneously bad image
of the applicant's credit history. Therefore, it is important to request copies
of your credit reports from the three major credit reporting agencies and review
each of them carefully for any errors. If mistakes are found, contact the credit
reporting agency to get them fixed before applying for a mortgage. The process
of removing errors from a credit history report can be time consuming and
troublesome but it must be followed through with until success is realized.
Your credit history is too important to not keep
an eye on it. Finding and fixing mistakes that make your credit history look
unjustly bad can mean the difference between getting approval for a home
mortgage loan or not.
Content from
www.digits.com
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