Mortgage Credit RepairMortgage credit repair can be an important step for a lot of people before they begin the process of purchasing or refinancing a home. Home mortgage lenders have a few different factors that are used to qualify a borrower for a mortgage loan.
Some of those factors include Income, Debt-to-income ratio, and of course your credit rating. Your credit rating will give the lender an idea of how likely it is that you will pay your mortgage according to the terms of the agreement.
They particularly pay close attention to your FICO score, You have a FICO score attached to each of your credit reports. (Equifax, Transunion and Experian)
Because you have three scores lenders will use the middle score to determine if you qualify for a mortgage loan and what the terms of the loan will be. When improving your credit to qualify for a mortgage loan you want to pay close attention to recent negative account and/or delinquencies.
Banks will frown upon such accounts and your score will also be dramatically lowered due to these accounts which can increase the interest rate a bank will give you on your loan. Some banks will ask you to settle such an account as a condition for approving your loan.
The same goes for collection and charge off accounts. Some lenders will ask that these accounts be paid in full before you can settle on your home. If you have these types of accounts on your credit report, it might be a good idea to send dispute letters to the different credit bureaus to have them deleted from your credit report before applying for a mortgage loan.
If these are accounts are a few months to a few years old then the approach you want to take is to settle them. You can call up the collection agency and let them know that you are interested in settling on your account in exchange for them deleting it from your credit report.
Some collection agencies can grant this request and other can only send you a document in writing saying that the account has been settled. In this case you would forward the document to your contact at the mortgage company.
According to the Fair Credit Reporting Act collections and charge offs should be deleted after seven years from the date the account was closed. This will avoid any possible issues that may arise during the mortgage application process.
It is a good idea to begin monitoring your credit report and scores at least six months before you actually apply for a mortgage loan. This way you will have enough time to resolve any issues on your credit report. Recent
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