One of Financing’s Best-Kept Secrets

If you’re hoping to purchase Boston real estate, but your credit score has suffered recently as a result of the economy, this may be something you want to pay close attention to!

You’re probably already aware that monthly payments you make such as your cell phone bill, utilities, rent, etc. are not reported on your credit score unless they go into collections. It’s unfortunate as these could greatly increase your credit score if they were reported. Well, you may be surprised to hear that your records of these on-time payments may not go entirely to waste! Under federal law, you are guaranteed the right to bring evidence of on-time payments that go unreported to lenders when you are a mortgage applicant. They are required to consider those records when deciding whether or not to grant you financing for purchasing Boston real estate. Should a loan officer refuse, he/she may be subject to legal penalties. Under the Equal Credit Opportunity Act, federal financial regulators acknowledge the right to provide additional data in general. However, the National Credit Union Administration published guidance for lenders which informs them that they must comply.

Taking “nontraditional” credit accounts into considering may provide help to buyer sand owners suffering from recession-scarred credit scores. This may also help those with few credit accounts and limited credit history. If this is such a wonderful technique for giving yourself an extra boost in appealing to lenders, why don’t more individuals employ this tactic? First of all, not every individual knows about this. At the same time, many lenders aren’t fans of having to sort through the records of an individual, which may or may not be accurate. Major lenders such as Federal Housing Administration, Freddie Mac, and Fannie Mae all claim they’ll accept alternative credit data, but have restrictions as to what they’ll consider. FHA does not allow those with low scores to boost them by supplementing them with nontraditional data. If you could increase your chances for financing by providing nontraditional credit data, would you put in the time to collect and present the records to your lender?

Do you feel it’s fair that lenders put restrictions on when and how you can present these records?