Posted on: 22 March 2019
Your next big investment will be in a new home. Your credit doesn't look too shabby to you, you have the income to make payments, and you have a stable employment history. You may assume that finding a mortgage loan will be easy to do. However, mortgage loans can be some of the biggest sums of money that consumers borrow, and creditors are not so quick to approve everyone who applies. There are several things that can show up on your credit report that lenders will frown upon, and these things could land you with a denied application.
You have been responsible with handling a large-sum loan.
If you have several small loans that you have successfully borrowed and paid off, you may assume your credit is good enough for a mortgage loan. However, mortgage lenders are a little iffy about lending larger sums of money to people who have never carried a large-sum loan responsibly in the past. Auto loans, for instance, can be several thousand dollars, which would be considered a larger-sum loan. If you are working to build your credit a bit before getting a mortgage loan, it can actually be beneficial to borrow the money to get a new vehicle and prove yourself by keeping up those payments for a while.
You have a well-established payment history.
Payment history is a hugely affecting factor on your credit report. If you have a lot of missed and late payments, the mortgage lender may assume you struggle to keep your payments paid. Payment history can come from small personal loans, student loans, or credit card payments, but no matter how small the payments are, if they are not handled properly, they can be detrimental in your odds of approval.
You do not have a lot of derogatory remarks.
Derogatory remarks are negative remarks on credit accounts. For instance, if you have an account that was closed without payoff, this would result in a derogatory remark on your credit report. Even something simple and often neglected, such as a closed utility account that was left unpaid or a medical bill you neglected, can leave stains on your report that lenders frown upon. Before you apply for a mortgage loan, it is best to try and resolve as many of these accounts as you possibly can. Not only will it help improve your credit rating, but it will also mean less of a chance that you will get approved.
For more information, contact a mortgage loan provider like Unison Bank in your area.Share