Most real estate professionals agree that if you have a history of late payments or suspect any problems with your credit report, it is a good idea to obtain a copy of your report several months prior to applying for a loan. This will allow you time to resolve any issues relating to your report, before your lender ever sees the report. U.S. Federal law ensures you the right to have access to your credit report, which may be obtained from your local credit bureau or any of several national firms that specialize in credit reports (TRW, Equifax, etc.). Go to Links – Obtain Your Credit Score On-Line, for information about obtaining your credit score and a copy of your credit report.

Late Payments

For most people, any problems on their credit report are likely related to late payments on a debt. If you were late one month on a debt (other than on a mortgage), but otherwise have a good payment history, most lenders won’t be too concerned. (You never want to have been late on a previous mortgage when applying for a new mortgage. It doesn’t mean you won’t get a loan, but it does send off a red flag to the lender.)

However, if you have a history of late payments, the lender will most likely require you to document the reasons why. A slow payment history won’t necessarily prevent you from obtaining a loan, but you may have to pay a higher interest rate and/or otherwise provide additional proof to the lender that you have the ability to repay the loan in a timely fashion.

Errors On Your Credit Report

Many people are surprised to learn that their credit report may contain errors or inaccurate information (another good reason to obtain a copy of your report prior to applying for a loan). If your report does contain errors, you’ll need to contact the reporting agency or creditor to have the problem resolved. Often times this is a slow process, so be sure to leave yourself enough time to clear up the mistake(s).

Note: The preferred lenders that we work with can assist you with repairing an erroneous credit report, typically without a fee.

Bankruptcies and Foreclosures

There’s no getting around it . . . a bankruptcy or foreclosure on your credit report is not a good thing. However, it doesn’t mean you cannot obtain a mortgage loan. Even though a bankruptcy or foreclosure may remain on your credit report for 7 to 10 years, most lenders will consider the circumstances surrounding the situation. And if you have re-established good credit since the bankruptcy or foreclosure, and a significant amount of time has past since the event (typically 2 to 4 years), a lender will be more inclined to approve you for a home mortgage.

Don’t let a bankruptcy or foreclosure discourage you from checking into the possibility of obtaining a home mortgage. Our preferred lenders have assisted homebuyers with these types of credit problems obtain loans. I would be happy to put you in touch with one of our preferred lenders so that you can discuss the possibilities. Simply give ME a call and I’ll gladly assist you.