Thursday, September 30, 2010

Two Credit Reports for Conventional Loans

Two credit reports are now needed for conventional loans. A conventional loan is any loan that is NOT a government loan - if a loan is not an FHA loan, a VA loan, or a USDA loan, then it is a conventional loan.

If the loan is a conventional loan, lenders are required to refresh the credit reports of all borrowers shortly before the closing. A refreshed credit report updates account balances, minimum payments, and credit inquiries (every time someone pulls your credit, you have a credit inquiry).

If there are any major differences between the original credit report and the refreshed report, they must be explained. This can cause delays in closings, and in some cases, can cause the loan to be denied.

How do you combat this new problem? Very easily. If you have applied for a mortgage, do NOT apply for any new credit (credit cards, car loans, furniture loans, increases in credit card limits, etc.) and do NOT charge more on your existing accounts. Wait until after the closing to buy all those things you need for your new house.

No comments: