Mortgage Lender Overlays On Credit Tradelines

Do All Mortgage Companies Have Lender Overlays On Credit Tradelines?

Many mortgage lenders have lender overlays on credit tradelines. What are credit tradelines? Credit tradelines are defined as a credit account such as credit card accounts, auto loans, installment loans, student loans, revolving credit account that is active that a consumer has established a payment history with for at least 12 months. FHA, Fannie Mae, Freddie Mac does not require credit tradelines to get an approve/eligible per Automated Underwriting System . However, most banks and many mortgage lenders do have lender overlays on credit tradelines. Depending on the mortgage lender, some mortgage lenders may require three credit tradelines that has been seasoned at least 12 months. There are some mortgage companies that have lender overlays on credit tradelines where they may require three credit tradelines that have been seasoned for 24 months while others may have lender overlays on credit tradelines that have been seasoned for 36 months. Again, if you run into a mortgage lender that has lender overlays on credit tradelines and you are told you do not qualify due to their lender overlays on credit tradelines requirements, no need to panic. Contact me at 262-716-8151 or email me at gcho@gustancho.com. I have no lender overlays on credit tradelines and am a FHA and Conventional mortgage lender with no lender overlays .

Why Are Credit Tradelines So Important?

Credit Tradelines are very important because it shows your payment pattern and its history. Creditors, especially mortgage lenders, judge those seeking credit on their likelihood of paying their credit payment on time by reviewing their prior payment history past. That is why the longer you had credit tradelines, the more favorably the creditor will judge you. Aged credit tradelines are viewed as compensating factors . Compensating Factors are positive strength that a mortgage loan borrower such as aged credit tradelines, reserves, larger down payment on a home purchase, second job the borrower has but is not used to qualify income, low debt to income ratios, and high credit scores. The older the credit tradelines the borrower has, the stronger the credit profile the borrower has and the more favorable the mortgage lender views the mortgage loan applicant.

How To Add Credit Tradelines With Bad Credit

Consumers who recently went through a bankruptcy or foreclosure should start re-establishing their credit and start adding credit tradelines as soon as possible. Adding credit tradelines is extremely important and increases your credit scores. Many consumers will have trouble and find it challenging in obtaining credit after bankruptcy or foreclosure so trying to obtain unsecured credit cards is not recommended. The best way of re-establishing credit is by getting secured credit cards. Secured credit cards is the fastest and easiest way of re-establishing credit. If you have no active credit tradelines, each secured credit card will boost your credit scores by at least 20 FICO or more points. Three secured credit cards is recommended with at least a $500 credit limit. The way secured credit cards work is by depositing a sum of money with the secured credit card provider and the secured credit card company will issue you a credit limit equivalent to the amount of the deposit. The deposit you place with the secured credit card company will be used by the company as collateral in the event you default with your payment agreement with them. Secured credit cards work exactly like unsecured credit cards and the secured credit card company will report your credit card payment history to all three credit reporting agencies. As your secured credit card ages, the stronger your credit profile will be and your credit scores will increase over time. After one year of having your secured credit card with timely payment history, your secured credit card provider will gradually increase your credit limit without having you to put any additional deposit.

Adding Yourself To Another Credit Card Holder Account

Another alternative of adding instant credit tradelines on your credit report is by adding yourself as an authorized credit card user to establish credit to another person’s credit card. There are risks associated with this strategy versus its rewards. The rewards are that you will have instant aged credit tradelines reported on your credit report. However, even if the main credit card holder pays their monthly payment on time, if the main credit card holder has maxed out credit cards, this will drop the credit scores of the authorized credit card user. Also, if the main credit card user is ever late with any of their monthly credit card minimum payments, it will reflect it on the authorized user as well and hurt the authorized user’s credit scores.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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