February 25, 2020

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Home Loan Credit Advice From Credit Bureaus

Home Loan Credit Advice From Credit Bureaus

We discuss FHA home loan credit issues here frequently, but our advice is only one source. What do the three major credit reporting agencies have to say about credit issues related to mortgage loans?

Equifax, Experian, and TransUnion all have official sites with advice for consumers who want a fair and honest mortgage loan. Let’s examine some of the advice for potential home loan applicants.

Mortgage Loan Credit Advice From Equifax

The credit reporting agency Equifax has some advice for borrowers, including a very useful tip about how to do damage control on your credit report if a situation beyond your control resulted in late or missed payments.

According to the Equifax official site, in such cases, “Consider adding a consumer statement to your credit reports.” Did you know you are permitted to insert a 100-word “consumer statement” into your credit report to explain such circumstances?

According to Equifax, these statements are made be part of your credit reports and will be read when your credit report is accedssed by potential lenders and creditors.

Credit Advice From TransUnion

The credit bureau TransUnion advises potential borrowers with thin credit to consider the age of their credit; “A credit reporting agency needs a track record of how you’ve managed credit before it can calculate a credit score. Typically, six months’ worth of activity will provide enough information to generate a score. As your credit history increases, your score might rise or fall based on how you pay your bills over time.”

TransUnion also has some advice for borrowers trying to repair credit ahead of a major loan application. “Check your credit score regularly with a monitoring service, but don’t let minor fluctuations stress you out.”

The agency reminds borrowers that credit scores are “just a snapshot of how you’re managing your credit at a particular moment in time. Paying your bills on time, maintaining low balances and not taking on too much debt can help to rehabilitate your credit profile, resulting in a higher score.”

Credit Repair Advice From Experian

Some borrowers want to know if making more than one payment on a credit card debt will improve FICO scores. The Experian official site says credit reports do not show how many times payments have been made in a give month, so the simple act of paying twice each time does not affect your FICO score.

However, according to Experian, “…two things are likely to happen when you make multiple payments each month. First, the minimum amount you owe will almost certainly be paid each month.

That means you won’t have any late payments. Making all your payments on time is the most important factor in credit scores.” Paying more each month also means reducing the principal balance faster.

Talk to your loan officer about this advice and see if there are any other steps you can take ahead of your home loan application to improve your chances at home loan approval. Remember, it’s best to start working on your credit as early as possible for best results.

Bruce Reichstein - Staff Writer

By Bruce Reichstein

October 9, 2019

Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.

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FHANewsBlog.com was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

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