Credit Scores - From a Lenders Point of View

Andrew Manzari (Benchmark Mortgage Group) — Tue, 05 Aug 2008 16:16:16 -0700

For any agent that has had a tough time explaining to a client how credit scores work, check out Consumer Reports article this month. Here is the link:

http://www.consumerreports.org/cro/money/credit-loan/credit-scores/overview/credit-scores-ov.htm

As a lender, I often am asked if I can use "an existing credit report" when I go to do loan application. Lenders should NEVER use a clients credit report - but that probably goes without saying. Lenders have to pull their own credit primarily for the reason that different lenders use credit agencies and each agency usually has multiple credit scoring models. Ensuring the right agency is using the right model is only obtained by using the lender's credit report.

In my opinion, the FIRST thing a client should do when buying a home is talk to a reputable lender who will pull their credit during the initial conversation. Based on that pull, lenders should educate clients on what they need to do in order to improve their scores. There are tricks to the trade, so make sure your lender knows what they are doing. My Loan Officers and Benchmark Mortgage Group know how to best assist clients in improving their credit scores. (HINT: Paying off all collections may initially hurt a clients score).

Check out the article; they even offer some general credit-maintenence tips.

PS. Don't forget, FHA now has minimum credit requirements AND new risk-based (credit-based) MI. It used to be 1.5 upfront and .5 monthly across the board - this is no longer the case.

Andrew Manzari's Blog

Credit Scores - From a Lenders Point of View