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Creditworthiness
A basic premise of mortgage underwriting is that the past
is a predictor of the future. If you paid your bills
on-time in the past, you will do so in the future. Because
a person will not always have good credit do to various unforeseeable
events, the mortgage industry tries to answer the question
of credit-worthiness by performing a credit check.
Good credit at the time of application is very important.
Bad credit is the main reason that a mortgage application is
denied. In the age of easy credit, underwriters place
much emphasis on how current credit is managed when granting
a loan. Because an underwriter uses a merged credit report,
one from all three of the major credit reporting bureaus, any
negatives are more likely to be found.
Irresponsibility is often the basis for credit problems,
however, more and more adverse information on ones credit
report is due to unchecked and uncorrected errors. If at
all possible, this is why it is important for a prospective
borrower to check his/her before a lender sees it. A consumer
can order a free credit report on themselves once a year
from each of the three credit bureaus.
Be aware that each bureau can and probably will have different
credit items reported.
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