The Mystery of Credit Scores
I’ll admit it. After more than a thousand mortgage loans in 10 years, I’m often perplexed by the formulas used by the major credit agencies that provide mortgage lenders – and other credit issuers – with consumer scores. Though I’m usually able to diagnose the reason for a lower score, I can’t say it always makes sense. This recent article sheds light on additional requirements the agencies will face to fairly represent our credit profiles. It’s certainly time that the bureaus face strict requirements given the fundamental importance placed on scores in the home-buying process.
I can’t tell you how many times I’ve surprised people with credit blemishes of which they have no knowledge. Top of the list: small medical collections – as little as $30 for a co-pay – that damage scores by as much as 100 points. One of my long-time customers was prevented from refinancing for TWO YEARS!
The Silver Lining: #1 Fixed rate loans place the most emphasis on scores. But if you’re able to finance your home over a shorter term, the additional costs for lower scores may not apply. #2 Great Midwest Bank offers portfolio products as an alternative to those with lower-than-average scores. We’ll use common sense when analyzing your scores.
Posted by Jon Reetz NMLS ID #296610