Important Change to Credit Reporting Could Help Some Mortgage Borrowers
We are almost exactly a month away from the introduction of a new method of credit reporting that could potentially help some people to finally obtain a mortgage.
As part of a number of measures being introduced to enable better qualified buyers to have more access to mortgage credit, The Federal National Mortgage Association (FNMA), the government-sponsored source of financing for mortgage lenders (more widely known as Fannie Mae), made an initial announcement last fall about the impending launch of what's called trended credit data reporting.
Set to be introduced on June 25th, this new method of assessing credit worthiness promises to go into considerably more depth concerning the credit histories of mortgage applicants.
At present, credit reports only tell mortgage lenders about an applicant's outstanding balances and if he/she has been timely or delinquent in paying existing credit accounts.
Trended credit data will facilitate a far more thorough analysis of previous borrower behavior. Lenders will now have access to how applicants' monthly payments have been made over time. An example of this would be if someone has merely paid minimum due amounts, or more, or if they settle balances each month.
This will really help lenders to see if borrowers regularly pay off revolving credit lines, such as credit cards, or if they carry those balances from month to month, making minimum or other payments.
Clearly, deeper assessment will be far more likely to demonstrate if a mortgage applicant practices good credit management.
This new measure will enable those persons who carefully control their credit lines to be more easily distinguished from other applicants with less admirable financial habits.
It's really good news, because many diligent borrowers who have been turned down for a mortgage in the past could quite possibly have another, better, shot at home ownership.
And it's also positive for those who still need to improve their money management, as the new data reporting gives them a more detailed framework to work within, in order to build credit and a more demonstrable, in-depth track record.
Of course it's absolutely essential that you seek the advice of a mortgage professional if you are in this situation. We have close working relationships with top local financial advisers, so why not contact us today and we'll be happy to put you in touch with them.