New Law Forces Lenders To Reveal Impact Of Credit Score On Offered Mortgage Rates

Starting on 1/1/11, mortgage lenders shall be forced to alert borrowers about how their credit scores could be preventing each individual from locking in the best possible mortgage rates.

The purpose of the credit score alert is mostly to caution mortgage borrowers about the impact of their credit score on mortgage rates and give the borrowers a chance to raise their credit score or if desired they may back out of the mortgage.

Sadly, this the alert system will more likely than not be just one more government-required piece of paperwork becoming unrecognizable in the neverending stack of documents that applicants methodically sign with hazy eyes.

Instead of being reliant on an easy-to-miss document, borrowers should check their credit scores before they look to find mortgages. To elevate their credit scores, customers are encouraged to correct any mistakes and pay down credit card loans while leaving the accounts open due to the fact that bigger credit lines relative to debt used is better for your credit score. Ways to better your credit score.

Regardless of government regulations, many reputable mortgage lenders will tell prospective borrowers of any issues concerning their credit score and, if possible, make an effort to work with borrowers in efforts to improve their scores. That's why consulting an experienced, dedicated mortgage lender is imperative.

The media's coverage of the matter indicates a lackluster welcoming for the new requirement. Equally as unimpressed is the credit reporting industry.

Lenders have been given some leniency in disclosing credit alerts, however the documents will probably reveal home buyers and homeowners refinancing their current mortgages how their respective credit score stacks up against other candidates, any or all significant factors that could drive down their individual score, a notice that individuals have the legal right to petition to change discrepancies they find on credit reports, and contact information of the three national credit bureaus. Applicants may also see a document detailing the methodology the bureaus use to calculate their credit scores.