3 Credit Report Land Mines That Threaten Your Mortgage Bid

By Barry Paperno

NEW YORK (Credit.com) — Congratulations! You found your dream home at a price you can afford. Your income and credit scores are high. Your debt level is low. No problem getting that loan approval, right?

There may be things in your credit report that may not be seriously hurting your credit scores — and may even be helping them — but can “really slow down the mortgage process,” according to David Kanis, a mortgage lending veteran at Fairway Independent Mortgage with more than 20 years in lending experience.

“You cannot imagine all the problems that can happen when any of these items show up on a credit report,” Kanis says.

Kanis has shared some of the most common credit reporting land mines that can stop a mortgage virtually in its tracks:

1. Disputes. Because disputed credit accounts are bypassed by some credit scoring calculations — due to the fact that their accuracy is being questioned — and because mortgage lenders must be able to confirm the accuracy of any disputed accounts and ensure that all accounts are included in the credit score, any disputed items must be resolved before loan approval. This can be particularly problematic when trying to close a home loan quickly; disputes typically take about 30 days to resolve.

2. Inquiries. All credit inquiries within the past 120 days must be documented and explained. According to Kanis, an inquiry for “a new installment loan taken out, such as a new mortgage or auto loan, can be a nightmare. Not only does the borrower have to provide a letter of explanation regarding the new loan, along with documentation of the payment terms and conditions, she may also be required to call in and be interviewed by the (oftentimes less than user-friendly) factual credit reporting companies used in the mortgage industry.”