Lenders may accept other sources of credit, such as a documented history of bills you've paid on time for rent, utility or cable services. For more information, contact an experienced PHH Mortgage loan officer at (800) 210-8849.
Effective ways to improve your credit score in one to two years include making payments on time and reducing your credit card balances. For more ideas, read our FAQ, “How can I improve my credit score?” or talk to an experienced PHH Mortgage loan officer at (800) 210-8849.
Credit is an agreement to borrow money with the promise that you will pay it back later through scheduled payments. It usually includes interest, which is additional money charged for the privilege and convenience of borrowing.
To help decide if it makes good sense to refinance, start by speaking with an experienced loan officer, call (800) 210-8849.
Good credit shows mortgage lenders that you make payments on time and are willing to repay any money borrowed. In general, people with good credit are often offered the lowest available interest rate.
One of the best ways to establish good credit is by making all of your credit payments on time. To determine your credit and find out what good scores are, consult our Credit Guide. For more about the benefits of good credit, and strategies for establishing, building and maintaining it, talk with a credit advisor.
If you make a payment after the stated due date, you may be charged penalties or late fees. A pattern of late credit payments may lead to poor credit and could negatively affect future loans. For instance, lenders may evaluate you as a high risk and offer a loan with a higher-than-usual interest rate.
In general, a mortgage payment is considered late, or delinquent, if it is received 15 days beyond the due date. A payment is considered to be in serious delinquency when it is 60 to 90 days late. Consequences may include costly penalty charges, default on the loan and possibly foreclosure on the property.
Before you submit a dispute to a credit-reporting agency, contact the creditor, who may be able to correct the error. Companies that provide credit-clearing services can be costly. If you do decide to contact the reporting agency:
If the reporting agency determines that the item was in error, request that the corrected report be sent to your potential mortgage lender.
For more information about correcting errors on your credit report, or any aspect of credit, contact an experienced loan officer at (800) 210-8849.
Here's a straightforward technique for boosting your credit score. It generally takes one to two years:
“Credit repair” or “credit consolidation” companies may offer to “fix” your credit history for a fee. Only you can repair your credit score, however. To discuss strategies for improving your credit score, talk to an experienced loan officer at (800) 210-8849.
Under the federal Fair Credit Reporting Act, you are entitled to receive one free credit report per year from each of the three major reporting agencies: Equifax, Experian and TransUnion. You can request these at
Consider getting reports from all three agencies, because not all creditors report information to each agency and there could be slight variations. Surprisingly, many credit reports contain at least one error, so examine yours closely for anything that may misrepresent you to lenders (see "how can I correct errors on my credit report" below).
Look for credit cards or accounts you no longer use, and verify all account numbers to make sure they match those in your records. Also, make a note of any late payments, which you may need to explain to your mortgage lender.
A not-for-profit credit counseling organization may be able to work with you and your creditors – usually at little or no cost – to set up repayment plans.
Your credit report displays your credit history and credit rating from credit bureaus. Lenders access and review your credit report to help them decide whether or not to approve you for a loan, what type of loan you qualify for and the interest rate for your loan.
A typical credit report includes five types of information:
A credit score is a summary of your overall credit, based on a statistical comparison to millions of other consumers. This score predicts how likely you are to repay a loan and provides lenders with a fast, objective way to evaluate your credit worthiness, determine whether to approve you for a loan and decide for which interest rate you qualify.
Credit scores typically range from 300 to 900, with most scores falling between 600 and 700. Your score will be higher (which is better) if you have had established credit for a long period of time, have always made payments on time and are not close to reaching limits on open credit accounts, such as credit cards.
Make credit and loan payments on time; collection notices and judgments against you for repayment of debt can negatively affect your credit score and loan applications. Be realistic in your borrowing practices and try to avoid overextending your credit by borrowing more than you can pay back.
A bankruptcy will be documented in a credit report for up to 10 years and will likely have a major, negative effect on securing a loan.
Information about a foreclosure or repossession can stay on a credit report for seven years and negatively affect your ability to secure a loan.
Bankruptcy is a legal process that may relieve you of your obligation to pay outstanding debts. Part of the bankruptcy proceedings may include distribution of your property to creditors as payment for the debt.
Foreclosure legally entitles your lender to sell a property if you are not able to pay your mortgage loan.
If you are unable to repay the loan on an item, the lender has the right to repossess, or take back, the item.