As part of the loan application process,
virtually all lenders will want to see a copy of your credit
report. The report will list all your long-term debts (credit
cards, mortgage payments, automobile and student loans, etc), as
well as your payment history. If you don't have a copy of your
credit report, most lenders will generally require you to pay for
a copy when they process your loan application.
However, most real estate experts agree
that it is a good idea to obtain a copy of your credit report
several months before you apply for a loan. This is so you have a
chance to resolve any problems with your credit before your bank
sees it. U.S. Federal law ensures that you have access to your
credit report, which may be obtained from your local credit bureau
or any of several national firms that specialize in credit
reports.
Late payments
For most people, problems with their credit report are likely
related to late payments on a debt. If you were late one month in
paying off your credit card, but otherwise have a good payment
history, chances are most lenders won't be too concerned. But if
you have a history of late payments you'll need to document the
reasons why. A slow payment history won't necessarily get you
turned down for a loan, but you may have to pay a higher rate of
interest or otherwise prove to the lender that you can repay your
loan in a timely fashion.
Errors on your credit report
Many people are surprised to learn that credit reports can often
contains errors or inaccurate information. If this is the case
with your credit report, you'll need to contact the reporting
agency or creditor to have the problem resolved. This can
sometimes be a slow process, so make sure to give yourself time to
clear up the mistake.
Bankruptcies and foreclosures
There's no getting around it, a bankruptcy on your credit report
is not a good thing. But that doesn't mean you still can't obtain
a loan. Even though a bankruptcy may stay on your credit report
for seven to ten years, lenders will often consider the
circumstances surrounding a bankruptcy (family illness, injury,
etc.). Moreover, if you have reestablished good credit since the
bankruptcy, a lender will be more inclined to approve your
application.
