What is Trended Credit Data and can it affect your mortgage approval?

You will start to hear the words “Trended Credit Data” and like me most likely have no idea what it means. This is a new layer of credit assessment appearing on credit reports. But before you stress out that this will affect you getting approved for a mortgage I wanted to go over the facts about this:

1. Your Credit Report- When applying for a mortgage your credit report will now feature a section going over Trended Credit Data. It will look at the last 24-30 months and see if you pay your credit card balances off or make the min payment. It will show if you carry a high balance in general and how much the payments are you make monthly.

2. Your Credit Score- This new addition will not affect your credit score. The credit score will still only take into account the current balance as of the date of the credit report, etc. Keep in mind, in general you want to keep your credit card balances under 30% of the high credit limit to allow your credit score to have the highest score possible. As an example, if your credit limit on the credit card is $300, you always want to keep the balance under $90 always. This does not mean just when the bill is due, but try to keep it under the $90 always. This is because the credit bureaus update this information at different times of the month, so not just when your bill is due.

3. Fannie Mae Mortgage Approval- The Trended Credit Data will be taken into account when approving loans. BUT DO NOT FREAK OUT! Based on the information from Fannie Mae the Trended Credit Data will affect about 1% of all mortgage approvals. What does this mean?? If you max out your credit cards but pay them on time and have a high credit score, your loan will still get approved. I am expecting that only someone with lower credit scores and other credit issues, will be affected by this new addition.

When the Trended Credit Data was announced, I knew that many people would fear the affects when buying a home. Not to mention the many poorly written articles you may read about this on the internet. So Dave Your Mortgage Guy wanted to set the record straight. The truth of the matter is that we should see this affect very few people applying for a mortgage and it is really just an additional tool for underwriters to use.