April 23, 2013
When you apply for an FHA loan, your loan application will include forms you sign to give your loan officer permission to pull your credit reports, check your employment history and other items that are required in order to approve your VA home loan.
But what are the rules for the lender when pulling your credit reports? What is the loan officer obligated to review and how is the process regulated? FHA loan rules, as printed in HUD 4155.1, give the lender a long set of instructions when it comes to accessing credit data.
For starters, the lender can only accept credit report information directly from the credit agencies.
It cannot come from any third party including the borrower. Additionally, HUD 4155.1 Chapter One Section Five states, “A credit report submitted with a loan application must contain all credit information available in the accessed repositories. Additionally, for each borrower responsible for the debt, the report must contain all of the information available in the credit repositories pertaining to
• residence history, and
• public records information.”
The lender is permitted to pull joint credit reports, “for individuals with joint accounts.”
Borrowers who do not have traditional credit histories can submit alternative credit qualifying data or show the lender where to access such data, but HUD 4155.1 requires follow-up with the credit agencies.
“FHA prefers that all non-traditional credit references be verified by a credit bureau and reported back to the lender as a non-traditional mortgage credit report (NTMCR) in the same manner as traditional credit references.”
For more information on credit report issues related to FHA home loans, contact the FHA directly at 1-800 CALL FHA.
Do you have questions about FHA loans or refinance loans? Ask us in the comments section.