Importance of Your Credit Rating in Getting a Mortgage

Good credit is more than money in the bank. When you are ready to buy a home, an investment property, or refinance your existing home, your credit report carries a lot of weight with mortgage lenders. It is not based on your character, intentions, or past circumstances. There is nothing personal about it. It is just a piece of paper representing your past. If your credit report is incorrect, inaccurate, or misleading, getting a mortgage to buy a home may be harder to get.

Since your previous credit repayment performance reflects your attitude toward credit obligations, determining your credit worthiness is one of the most important components of the process. Lenders therefore review your credit report to establish your credit history by examining your performance with mortgage payments as well as with revolving debt such as department store, bank credit cards, and car loans.

Payments received 30 days past the due date are usually recorded as late in your credit report. However, lenders are generally not concerned with isolated, minor slow payments unless an on going pattern is established. Credit reports also include public records such as collections, repossessions, foreclosures, and bankruptcies. Though these items may indicate past credit problems, there are often valid reasons, and a well established pattern of excellent recent credit will be taken into consideration. Lenders will typically allow one or two late payments as long as your credit score remains relatively high – usually in the 640 range.