Credit Report: Fico scores, Bankruptcy and Liens
Written by:
Angelina Johnson,
NAMP Volunteer Writer
As loan package cosists of different risks factors, credit report carries a third of these risks. As we know, interest rates are primarily FICO driven. Though other factors are used, borrowers with high tier FICO generally get better rates.
Most guidelines underwriters use require 3 trade lines to approve a mortgage loan. Each with 24 months history for the purposes of establishing good payment history. As underwriters approve loans on an individual basis, Each trade line must show reasonable high credit and satisfactory payment to justify lending a mortgage debt. A borrower may have 3 trade lines with $500 or so high credit on each. In this intance, the underwriter will likely call for a higher authority approval since trades are weak. Depending on the borrowers profile, non-traditional credit may be allowed in place of these trade lines. A non-traditional V erification of Loan (VOL) then is forwarded to the credit reporting agency for a credit supplement. Hence, justifying the loan approval.
Bankruptcy, liens and judgments adversely affect the credit scores therefore it is important to verify if the information pertaining the these negative factors are accurate. An individual with proof of any inaccuracy may seek a 'rapid rescoring process' from the credit reporting agency with supporting documents. Credit bureaus are fast on sniffing derogatories, liens and other items that affect the FICO scores negatively yet they are not as aggresive on research ones the items are satisfied.
Credit report in itself is a major determining factor of the loan but this is not solely the basis of the approval. It must be understood that the sooner you catch any inaccuracies, preferably prior to submission, the smoother the processing will be.
About the Writer. As one of NAMP's volunteer writers, Angelina Johnson is currently a NAMP member in good standing and has applied for her CMLP certification with NAMP. Feel free to email Angelina at: angelina@mortgageprocessor.org. Or, if you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.
Angelina Johnson,
NAMP Volunteer Writer
As loan package cosists of different risks factors, credit report carries a third of these risks. As we know, interest rates are primarily FICO driven. Though other factors are used, borrowers with high tier FICO generally get better rates.
Most guidelines underwriters use require 3 trade lines to approve a mortgage loan. Each with 24 months history for the purposes of establishing good payment history. As underwriters approve loans on an individual basis, Each trade line must show reasonable high credit and satisfactory payment to justify lending a mortgage debt. A borrower may have 3 trade lines with $500 or so high credit on each. In this intance, the underwriter will likely call for a higher authority approval since trades are weak. Depending on the borrowers profile, non-traditional credit may be allowed in place of these trade lines. A non-traditional V erification of Loan (VOL) then is forwarded to the credit reporting agency for a credit supplement. Hence, justifying the loan approval.
Bankruptcy, liens and judgments adversely affect the credit scores therefore it is important to verify if the information pertaining the these negative factors are accurate. An individual with proof of any inaccuracy may seek a 'rapid rescoring process' from the credit reporting agency with supporting documents. Credit bureaus are fast on sniffing derogatories, liens and other items that affect the FICO scores negatively yet they are not as aggresive on research ones the items are satisfied.
Credit report in itself is a major determining factor of the loan but this is not solely the basis of the approval. It must be understood that the sooner you catch any inaccuracies, preferably prior to submission, the smoother the processing will be.
About the Writer. As one of NAMP's volunteer writers, Angelina Johnson is currently a NAMP member in good standing and has applied for her CMLP certification with NAMP. Feel free to email Angelina at: angelina@mortgageprocessor.org. Or, if you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.
posted by Editor in Chief at 6:26 PM
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