Your Credit, Delinquency Amounts, and Your Mortgage

Summary

Your credit score is based on many factors, and being delinquent on an account can have a major impact.

Your credit score will determine if you are approved for a mortgage, the amount and type of loan you will be approved for.

Knowing how your credit works can help you get a better mortgage and save or cost you thousands of dollars.

Basics

The amount of each delinquency you have will be sorted by:

• consumer credit
• mortgage credit

Consumer Credit

Consumer credit is defined as credit cards, department store cards, and other forms of credit that you are extended as a consumer.

A borrower can have many different consumer credit lines.

Delinquent accounts can show up on your credit report in many forms.

You may have a delinquent cell phone bill, or a creditor reporting a delinquency on your credit report that you are unfamiliar with. When you see a creditor with an unfamiliar name on your credit report chances are it is the name of a debt collection company that has purchased your bad debt.

If you can, you should at least resolve the smaller amounts of delinquent items on your credit report. It is relatively cheap and may help you improve your credit.

Often times people will have small $30 or $60 items on their credit report listed as delinquent items. There may be many small items like these that take up a lot of space on a credit report. When a mortgage lender looks at this they may see a large list of delinquent items, even though the total amount is not large.

Mortgage Credit

Your past payment history on mortgages is very important to a mortgage lender.

They are usually looking for someone who pays their mortgage on time, even if they are late on other credit lines.

There are lenders that work with borrowers who have 30 day, 60 day, or more lates. These are people who are seriously behind on their mortgage.

For many lenders this is a red flag. Some mortgage lenders will allow a borrower who has been late once by 30 days in the last 12 months. There are others who will allow more lates, but it depends on the lender. Some mortgage programs require a borrower not to be late at all within the past 12 months on their mortgage payment.