Introduction
When you apply for a mortgage to buy a home, the lender needs to check your credit report. This report must come from major national credit bureaus. There are specific types of credit reports that are acceptable, which are detailed in another part of the guide. If you don’t have enough credit history to get a credit score, or if you don’t use credit that gets reported to the major bureaus, the lender may use different methods to check your creditworthiness.
General Requirements
The credit report the lender pulls must cover a few key areas:
– It should show credit and public record information from everywhere you’ve lived in the last two years.
– If you’ve lived outside the U.S., the credit report from that country must meet U.S. standards and be in English or translated to English.
– It needs to show all credit and legal issues that are not too old to be considered. The law has time limits on how long these can affect your credit report, but the lender only needs to see the last seven years.
– The credit report must be original and unaltered.
– It must include contact information for the credit reporting agency and list the major credit bureaus that contributed information.
– Any issues or unclear items on the report must be addressed by the agency, saying either they couldn’t verify the information or the employer wouldn’t confirm it.
Public Records Information
Your credit report must list any legal judgments, foreclosures, tax liens, or bankruptcies found in public records. These must be reported following the law and based on what consumer reporting agencies report.
Acceptable and Unacceptable Changes
It’s okay to remove duplicate information from your credit report, translate technical terms into plain language, and clear up conflicting details. However, it’s not okay to delete information related to bankruptcy, add payment amounts where none are required, or only look at a shorter time period than the lender needs.
Required Creditor Information
For every debt listed on your report, it must show:
– The creditor’s name.
– When the account was opened.
– The highest amount of credit used.
– The current status.
– How much you need to pay.
– How much you still owe.
– Your payment history.
The report must also show when each account was last checked with the creditor, which should be within 90 days before the report date.
Format for Reporting Payment History
The report must clearly show how often and how late payments were made. It should use a simple format like “0 x 30, 0 x 60, 0 x 90 days late” to show this. Other formats can be used as long as they are easy to understand.
Inquiries
The credit report must note any time a credit check is made, which will show up on future reports. It should also list all inquiries from the last 90 days.
Unreported Debts
If the credit report misses any significant debt you listed on your application, the lender must check those debts separately. This also applies to accounts the credit report says need more authorization or will be rated by mail only.
Assessing Borrower Credit Management Skills
Lenders look at your payment history, how you use your credit, and your experience with credit to understand how well you manage debt.
Credit Report Requirements in Desktop Underwriter
For automated underwriting, lenders must use a specific type of credit report that combines information from three credit bureaus. This report must be included in your loan file. The system will note all credit reports it looked at during the process. The report must support detailed past credit behavior and be current.
Note: Credit reports must be from the U.S. or its territories, except for military addresses. Foreign credit reports require manual underwriting.
Credit Score Requirements
For information on how your credit score affects your loan, see another section of the guide.
References
For more details, visit Requirements for Credit Reports of the Fannie Mae Selling Guide.