Common Questions Regarding Credit When Purchasing a Manufactured Home
When it comes time to purchase a manufactured home, or any other home, ones credit report can hinder the chances of actually making that purchase and/or can determine the amount of interest or down payment required to obtain financing. In applying for a mortgage, your credit may be the single factor that opens or closes the door to purchasing the home that you want at a low interest rate.
You may believe you have a strong credit rating but have never actually seen your credit report. Or perhaps you’re concerned that past credit problems will come back to haunt you as you apply for a manufactured home loan. Whichever boat you are in, the first step is the same: Obtain a copy of your credit report and review it for accuracy.
Credit reports are maintained by three credit reporting agencies: Experian, Transunion, and Equifax. It is a good idea to obtain your credit report from all three agencies, since each may contain different information and you don’t know which will be supplying your report to your lender (if not all three).
What do I do when I get my report?
Read through it carefully, paying extra attention to the section on your payment history. If there is incorrect or missing information that would improve your credit score, report it to the credit bureau. Under the Fair Credit Reporting Act, consumers have the right to contest information in their credit reports.
Also please make sure that all debt on your credit report belongs to you. I’ve seen many times that if you have a common name or a name that both father and son share, sometimes the debt/inquiry will accidently appear on the wrong person’s credit report.
What is a credit score?
Credit scores are composites that indicate how likely you are to pay on a loan or credit card as agreed based upon your payment history, amounts of debt, length of credit history and types of credit in use. The credit grantor reviewing your application compiles your score based on information from your credit report and other data, including your income level in relation to your existing debt and the additional payment obligation from the debt you are applying for.
Fair, Isaac and Company (FICO) developed the mathematical formula for establishing scores. Scores range from 300 (poor) to 850 (excellent) and the rule of thumb is the higher the score, the lower risk to lenders.
How do I correct a mistake?
Follow the directions of the credit bureau issuing the report. The bureau will contact the source of the information in question and attempt to resolve the dispute. Also, if late payment information is accurate but you have a good explanation (e.g., If you were laid off from work or became very ill, you are allowed to add that information to your report).
How do I establish credit?
If you have never taken out a credit card or borrowed money from a financial institution, or if your accounts are young, you can establish credit history by having your rent payments to landlords and monthly payments to utility companies added to your credit report.
How do I reestablish good credit?
If your credit report contains negative information such as frequent late payments, repossessions, collection activity or bankruptcy, you may want to wait to apply until after you’ve improved your credit record. Rebuild your credit by showing strong payment history in the years following any problems. Most lenders prefer for three years to have passed since a foreclosure on a mortgage and at least two years since bankruptcy. Lenders are willing to forgive black marks on a credit report if you establish a pattern of responsibility.
Purchasing a manufactured home is most likely the biggest decision any of us will make in our lifetime. Today’s manufactured home allows many Americans to realize their dream of affordable homeownership. I have seen many who could not live that dream because of credit issues. Many of those possibly would have qualified had they taken the time and effort to get their credit report in order prior to making application for financing. Once a lender turns down an application, it is seldom that they will reconsider based upon information after the fact.
