Your Credit Report
Your past repayment practices on obligations are the best indicator of your willingness to repay future obligations. The investors emphasis is on your overall payment patterns rather than isolated occurrences of unsatisfactory repayment.
Rent and Mortgage Payment History
Your rental history and any outstanding, assumed, or recently retired mortgages must be verified and rated.
Absence of Credit History
If you have no established credit history, the investor will base the determination on your payment record on utilities, rent, automobile insurance, or other expenses that your have paid.
Absence of a credit history is not generally considered an adverse factor. It may result when:
Accounts in the Spouse's Name
Upon the applicant's request, the lender must consider any account reported in the name of the applicant's spouse or former spouse that the applicant can demonstrate accurately reflects the applicant's creditworthiness.
Consideration of the Spouse's Credit History
The credit of a spouse will not be checked for those who will not be contractually obligated on the loan except:
In circumstances not involving bankruptcy, satisfactory credit is generally considered to be reestablished after you have made satisfactory payments for 12 months after the date of the last derogatory credit item.
If it is determined that your credit is satisfactory in spite of derogatory credit information, include an explanation of the basis for the determination.
For unpaid debts or debts that have not been paid timely:
Consumer Credit Counseling Plan
If your have prior adverse credit and are participating in a Consumer Credit Counseling plan, you may be determined to be a satisfactory credit risk if you demonstrate 12 months' satisfactory payments and the counseling agency approves the new credit.
If you have good prior credit and are participating in a Consumer Credit Counseling plan, such participation is to be considered a neutral factor, or even a positive factor, in determining creditworthiness.
If a bankruptcy exists in your credit history, it does not in itself disqualify the loan. Your will need to provide complete information on the facts and circumstances of the bankruptcy, so the investor can consider the reasons for the bankruptcy and the type of bankruptcy filing.
If the bankruptcy was discharged more than 2 years ago, it may be disregarded.
If the bankruptcy was discharged within the last 1 to 2 years, it is probably not possible to determine if you are credit is satisfactory risk unless both of the following requirements are met:
Divorce is not generally viewed as beyond your control. If the bankruptcy was caused by failure of the business of a self- employed applicant, it may be possible to determine that the applicant is a satisfactory credit risk if:
If your have been discharged in bankruptcy within the past 12 months, it will not generally be possible to determine if you are a is a satisfactory credit risk.
Chapter 13 of the Bankruptcy Code
This type of filing indicates an effort to pay creditors. Regular payments are made to a court-appointed trustee over a 2 to 3 year period or, in some cases, up to 5 years, to pay off scaled down or entire debts.
If you have finished making all payments satisfactorily, the lender may conclude that you have reestablished satisfactory credit.
If you satisfactorily made at least 12 months' worth of the payments and the Trustee or the Bankruptcy Judge approves of the new credit, the lender may give favorable consideration.
The fact that a home loan foreclosure (or deed-in-lieu of foreclosure) exists in an applicant's (or spouse's) credit history does not in itself disqualify the loan.
If the foreclosure was on a VA loan, you may not have full entitlement available for the new loan. Your Certificate of Eligibility will reflect the amount of VA entitlement to meet any secondary marketing requirements of the lender.