About Your Credit

Get Prepared Now.
Buying a new home can be one of the most exciting and rewarding experiences of your life. The mortgage process requires many steps, however, and your experience will be smoother if you arm yourself with facts before you begin.

Credit is Important.
Once you apply for a mortgage loan, we will review your credit record to make decisions on approving your loan and offering you rates and terms. Your credit record tells how well you have handled credit in the past and how you are using it today.

In the United States, three major credit bureaus track your credit record: Equifax, Experian, and Trans Union. These agencies collect information about your payment history to your creditors, such as banks, credit card issuers, retailers, and other lending groups. Some credit accounts you might have are your bills for charge card accounts, student loans, auto loans, apartment rentals, and even utilities.

When you apply for a loan, we buy a credit report from one or more of the credit bureaus. We analyze the information to decide whether or not we will be able to offer you a loan. If approved, we will offer you rates and terms based upon your credit rating.

The better your credit record, the better rates and terms you will be offered. But having low or poor credit does not mean you will not be able to secure a loan.

Credit scores only consider the information contained in your credit profile. They do not consider your income, savings, down payment amount, or demographic factors like gender, race, nationality or marital status. Past delinquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and number of inquiries are all considered in credit scores. Your score considers both positive and negative information in your credit report. Late payments will lower your score, but establishing or re-establishing a good track record of making payments on time will raise your score.

Different portions of your credit file are given different weights. They are:

• 35% - Previous credit performance (specific to your payment history)
• 30% - Current level of indebtedness (current balance compared to high credit)
• 15% - Time credit has been in use (opening date)
• 15% - Types of credit available (installment loans, revolving and debit accounts)
• 5% - Pursuit of new credit (number of inquiries)

The most important factor for a good credit score is paying your bills on time. Even if the debt you owe is a small amount, it is crucial that you make payments on time. In addition, you may want to: keep balances low on credit cards and other "revolving credit;" apply for and open new credit accounts only as needed; and pay off debt rather than moving it around. Also don't close unused cards as a short-term strategy to raise your score. Owing the same amount but having fewer open accounts may lower your score.

Recent changes minimize the negative effects that rate shopping can have on a mortgage applicant. If there is a consumer originated inquiry within the past 365 days from mortgage or auto related industries, these inquiries are ignored for scoring purposes for the first 30 calendar days; then, multiple inquiries within the next 14 days are counted as one. Each inquiry will still appear on the credit report.

Every score is accompanied by a maximum of four reason codes. Reason codes identify the most significant reason that you did not score higher. The reason codes can help a lender describe the reasons for higher than expected rates or loan denial. Scores are not part of the credit profile and are not covered by the Fair Credit Reporting Act.

Your credit report must contain at least one account that has been open for six months or greater, and at least one account that has been updated in the past six months for you to get a credit score. This ensures that there is enough information in your report to generate an accurate score. If you do not meet the minimum criteria for getting a score, you may need to establish a credit history prior to applying for a mortgage.