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©
2002 Ruth E. Campbell. |
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Frequently Asked Questions Mortgages
- Q & A Q: What exactly is bad credit?
A: There are numerous types of credit report problems
that would cause a lender to reject your application for a loan. Such problems include: missing a credit card payment, defaulting
on a prior loan, filing for bankruptcy in the past seven years
or not paying your taxes. Other black marks on a credit report
include a judgment filed against you (perhaps for nonpayment of
spousal or child support) or any collection activity. If you feel that your credit report is wrong, experts say
it's best to take it up with the organization or company claiming
you owe them money. But if you've been late paying your bills, regroup by paying
in full and on time for six months to a year to prove to the
lender that the late payments were an aberration. You can order a copy of your own credit report by calling the
three major credit reporting agencies: Experian at (800) 392-1122,
Equifax at (800) 685-1111 and Trans Union at (312) 408-1050. Q: What if there is a credit reporting mistake on my report?
A: There is no fast and easy way to repair damaged credit
that took months or years to occur. The law allows negative
information to appear on an individual's credit record from
seven to 10 years. Credit problems are the main reason would-be home buyers are
denied a loan. The first step to clearing up your credit is
to get a copy of your credit report to make sure that the negative
credit information is indeed accurate. For a copy of your report,
contact one of the three major credit reporting agencies: Experian
at (800) 392-1122, Equifax at (800) 685-1111 and Trans Union
at (312) 408-1050. The bureaus should provide instructions on how to read the
report and how to dispute any inaccuracies it contains. If your credit report is correct, take care of any outstanding
delinquent obligations first. Lenders usually won't consider
any borrower who has had a delinquent payment in the past year. Q: Will bad credit prevent someone from getting a home?
A: There are numerous types of credit report problems
(which may or may not be your fault) that would cause a lender
to reject your application for a loan. Such problems include: missing a credit card payment, defaulting
on a prior loan, filing for bankruptcy in the past seven years
or not paying your taxes. Other black marks on a credit report
include a judgment filed against you (perhaps for nonpayment of
spousal or child support) or any collection activity. If you feel that your credit report is wrong, experts say
it's best to take it up with the organization or company claiming
you owe them money. But if you've been late paying your bills, regroup by paying
in full and on time for six months to a year to prove to the
lender that the late payments were an aberration. You can order a copy of your own credit report by calling
the three major credit reporting agencies: Experian at (800)
392-1122, Equifax at (800) 685-1111 and Trans Union at (312)
408-1050. Q: How do I find out what my credit report says?
Q: Where do I get a copy of my credit report?
Q: Where do I get information on consumer credit laws?
Q: What do I do if I get turned down for a loan?
A: Increasing numbers of loan applicants are finding
ways to buy their own home despite past credit problems, a lack
of a credit history or debt-to-income ratios that fall outside
of traditionally acceptable ranges. Ask the lender for a full explanation, then appeal the decision
in writing. Q: What do I do about bad credit?
A: Credit problems are the main reason would-be home
buyers are denied a loan. The first step to clearing up your
credit is to get a copy of your credit report to make sure that
the negative credit information is indeed accurate. For a copy
of your report, contact one of the three major credit reporting
agencies: Experian at (800) 392-1122, Equifax at (800) 685-1111
and Trans Union at (312) 408-1050. The bureaus should provide instructions on how to read the
report and how to dispute any inaccuracies it contains. If your credit report is correct, take care of any outstanding
delinquent obligations first. Lenders usually won't consider
any borrower who has had a delinquent payment in the past year. Q: How do you clear up bad credit?
A: There is no fast and easy way to repair damaged credit
that took months or years to occur. The law allows negative
information to appear on an individual's credit record from
7 to 10 years. The first step is to check your existing credit record. Anyone
can obtain copies of their own credit report free of charge
if they have been turned down for credit recently. For a fee,
people can request copies of their own credit report from the
three major credit reporting agencies: Experian at (800) 392-1122,
Equifax at (800) 685-1111 and Trans Union at (312) 408-1050.
The bureau also should provide instructions on how to read the
report and how to dispute any inaccuracies it contains. If the credit report is correct, take care of any outstanding
delinquent obligations first. Resources: * "Rebuild Your Credit: Law Form Kit,"
Nolo Press, Berkeley, Calif.; 1993. Q: How long do bankruptcies and foreclosures stay on a credit report?
A: Bankruptcies and foreclosures can remain on a credit
report for seven to 10 years. Some lenders will consider an borrower earlier if they have
reestablished good credit. The circumstances surrounding the
bankruptcy can also influence a lender's decision. For example,
if you went through a bankruptcy because your employer had financial
difficulties, a lender may be more sympathetic. If, however,
you went through bankruptcy because you overextended personal
credit lines and lived beyond your means, the lender probably
will be less inclined to be flexible. |