December 6, 2013
A reader asks, “I inquired about a refi with [a lender], I have a bankruptcy on my credit report but I have been out of it for three years. I was told that I had two late payment on my report thru my credit union.”
“I informed the person that I spoke that my payment to my credit union was automatic payment and that those were no fault of my own. He explained to me that I would have to contact my cu and they would have to call the reporting bureau, he also stated that until that was remove I would not qualify for a loan. Is this true?”
This reader question raises a very good point about FHA mortgages all borrowers should keep in mind. Not all lender standards are the same. Asking “Is this true?” about a situation governed by lender standards (and not necessarily FHA requirements) makes it difficult to answer–not all financial institutions have the same policies.
If the reader is asking about a point in FHA loan rules which may apply in this case, the answer is still, “It depends on the lender”. Lender standards for credit, approving loans when there are credit issues like these, and processing loan applications in such cases is really up to the institution.
The FHA has some minimum guidelines when it comes to FICO scores and general loan repayment history information, but it is still up to the lender’s discretion to determine whether a borrower is indeed a good credit risk or not.
That’s why it’s a good idea to shop around for your FHA loan before applying–you may find a lender willing to work with your circumstances in these cases where another may not–it all depends on the individual circumstances.
The best thing a borrower can do before applying for an FHA loan or refinancing loan is to examine credit reports and know what might be on those reports prior to making the application. Planning ahead for potential problems such as these can be a big help–the earlier you start examining credit reports and scores prior to application time, the longer you have to correct any problems such as the ones mentioned in this reader question.”
Do you have questions about FHA home loans? Ask us in the comments section. You can apply or get preapproved for an FHA loan at www.FHA.com, a private company and not a government website.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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