Can you get a mortgage if you have a derogatory item on your credit report, such as a collection, charge-off, or a judgment?
Believe it or not, your credit score may be high enough to qualify even with the derogatory item on your credit report; depending on the dollar amount of the derogatory item, it may not need to be paid off in order to qualify.
The first thing to do is to pull your credit and take a look at the derogatory items. If you want to do this on your own, you can go to www.annualcreditreport.com, where you get one free credit report per year; you cannot get your credit score at this website, but you will be able to see what is reporting on your credit. Contact us and we can pull your credit.
If your score does not qualify, we will work with you to improve your score. If the score meets the minimum requirement, complete a loan application on our website at www.counselmortgage.com to see if you can qualify for a home loan.
Once you review your credit report, your initial reaction may be to pay off the collection, charge-off, or judgment thinking your credit score will improve; this may not be the case. When you payoff a collection or charge-off, your score actually goes down first, before it will go up. In fact, it may take months before the score will improve. The rationale for this, in my opinion, is that it is an admission by you that you have owed this debt and are now getting around to paying it much later. As a result, the score initially decreases. The score typically recovers over a period of time.
Judgments are a little different. You most likely will have to satisfy the judgment before you will be approved for a mortgage. The lender will want the judgment satisfied in order to ensure that no other liens could affect their mortgage on the home.
Contact us about the judgment and we can let you know if you should satisfy it before applying for the loan.
In sum, derogatory items on your credit report do not necessarily mean that you will not be able to qualify for a home loan. Have us review your credit report and see if you can qualify notwithstanding the derogatory item.
We offer a variety product services, ask us how we can assist you today:
Counsel Mortgage Group®, LLC
AZ MB #0909580
CA DBO #60DBO43873
John Rapasky is the President of the Counsel Mortgage Group, LLC. Copyright © 2017 Counsel Mortgage Group®, LLC