 TITLE: What Factors Do Mortgage Lenders Consider? CONTENT: What Do Mortgage Lenders Look for on Your Credit Report?\n--------------------------------------------------------\nFinancial institutions will closely scrutinize your credit report when reviewing your application for a mortgage loan. While they look at your credit score, they also dive much deeper. Here are some of the things lenders will consider:\n*   **Recent applications**: Lenders take a look to see if you've recently applied for any other forms of credit or debt. These applications cause what are called hard inquiries on your report, too many of which can look risky since a flurry of applications for new debt can indicate financial trouble.\n*   **Payment history**: Lenders also will review your payment history on credit cards, loans, lines of credit and anything else that shows up on your credit report. They want to make sure you have a track record of on-time payments that could indicate you'll be a responsible mortgage borrower. If you have any old payments that were late or missed, the lender may ask you for an explanation.\n*   **Credit utilization**: Your credit utilization ratio is a factor mortgage lenders consider. This ratio indicates how much of your available credit you're using at a given time. If you're using too much of your credit, it can make you appear overleveraged, and thus riskier to lenders. Most lenders prefer your credit utilization be under 30%, so make sure you're not exceeding this to see a positive impact on your credit scores and mortgage approval chances. In other words, if you have a credit card with a $10,000 limit, aim to keep your balance under $3,000.\n*   **Major derogatories (such as bankruptcies)**: This includes any negative mark that makes you look riskier as a borrower. This could be a bankruptcy, judgment, delinquent account, account in collections, charge-off or an account settled for less than what was owed.\n*   **Being an authorized user**: When you're an authorized user on someone else's credit card account, it typically shows up on your credit report. The primary account holder's activity is reflected on your credit, so if they've used the account responsibly, it can help make your credit look better. However, your lender may not view this activity as a good way to assess your finances since you're on someone else's account, which doesn't necessarily represent how you'd handle a mortgage. Generally, lenders will consider accounts where you are the primary account holder much more heavily.\n*   **A dispute statement**: Mortgage lenders will also check to see if there are any dispute statements or pending disputes on your credit report, and may look upon them negatively. Also, a dispute can hold up the mortgage underwriting process from a logistical standpoint. If you have a pending dispute on your credit report, it's advisable to wait for the dispute process to resolve before you apply for a mortgage. Lenders prefer to see a true view of your credit, without a pending dispute clouding the picture. END