What people in Pennsylvania - PA should know about their credit report while applying for a bad credit home loan?
"Before we can qualify you for this bad credit mortgage loan, we need to pull your credit report." You've heard it before when applying for any bad credit home loan or mortgage refinance. Home loan applicants in Pennsylvania know they have a credit report, and accompanying that credit report is a credit score. But what, exactly, is a credit report? A credit report is a factual record of your credit payment history where all of your records can be compiled from various sources into one database. Simply put, it is a central warehouse of all your credit transactions in the past.
Think of it this way: If there were no credit reports, poor credit mortgage lenders in Pennsylvania would have to call each of your current and past lenders individually to confirm your credit worthiness. They would also have to check public records in various Pennsylvania counties for judgments or liens against you. This would be a long and tedious process. Bad credit mortgage companies would spend all their time on credit checks instead of issuing bad credit home loans. Since this would not be economically profitable, local subprime lenders would only lend to local customers they knew personally. So if you were to apply for a bad credit home loan, you would probably be turned down since chances are that the subprime mortgage lenders won't know you personally. Or the poor credit lenders would lend you a lesser amount to make up for the risk.
Luckily, in the present world credit bureaus do this work for bad credit lenders and subprime lenders. A credit bureau can be likened to a forum where creditors come together and share information on your past loan and payment history. So when you apply for a bad credit mortgage loan, the subprime lenders can quickly evaluate their risk when they make a home loan to you.
So what kind of information about you do the credit bureaus share? There are five basic types of information that appear on you credit report, usually in the following order:
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Identifying information – Current and previous names and addresses, social security number, and possibly marital status. If your name is misspelled on an account, that “alias” will show up as well when your bad credit home loan lender pulls up your credit report.
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Collection Accounts – Credit accounts that have been referred to a collection agency. Credit accounts get forwarded to collection agencies when the loan is delinquent, in default, or for other negative reasons. If a collection agency was unable to collect on the loan to their satisfaction, it will show up as “unpaid”. Contrarily if the collection agency was able to collect the loan to their satisfaction, it will show up as “paid”. Either way, poor credit home loan lenders in Pennsylvania consider collection accounts to be very negative when making a decision on your home mortgage loan.
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Credit History – Includes most credit accounts from car loans and student loans to credit cards and home mortgages. Most major creditors report your account activity and information to at least one of the three major credit bureaus. This includes payment history (good and bad), credit limit, amount owed, monthly payments, open/closed accounts, etc. This is the most important factor that subprime lenders in Pennsylvania look for when you apply for a bad credit mor