Mortgage Info for Homes and Small Business Financing

Credit Reporting Bureaus Track More than Your Credit History

Besides tracking your credit history including payment history, how much debt you have and your use of revolving credit, Credit Reporting Agencies (CRAs) track much more information that has nothing to do with your credit history.

While this data is tracked it has nothing to do with calculating FICO credit scores, a component of all mortgage pricing.

Your Home Address is tracked

You may ask yourself why not track home addresses?  They need to send the bill somewhere (if you still use snail mail).  Although it is not a suspected component of the Fair Issac Credit Score, it still can be used to evaluate borrowers when they apply for credit.

Individuals who change addresses often may be viewed as less financially stable and therefore not deserving of new or additional credit.  Louis Hyman, a consumer-credit historian and assistant professor at Cornell University says it may be harder to track down such an individual if the debt is ever sent to collection.  In addition, he says that those who move more frequently may be viewed as more likely to miss regular payments due to the shuffle of mail and the move.

A spokesman for the Consumer Data Industry Association (CDIA), which represents credit reporting agencies or credit bureaus, says storing consumers’ addresses helps bureaus identify the correct credit report to give lenders when a consumer applies for credit.  The industry says it relies on this field of information to deliver accurate information to its data thirsty customers.

Stability is Perceived as a Better Credit Risk

Yes, stability is a component of credit risk perception.  Be aware of this.  It doesn’t mean you shouldn’t change jobs if there is a better opportunity.  It also doesn’t mean don’t move if a better, more affordable or safe environment is available for you and your family.  Just be aware of the timing and the potential consequences.

Salary Information is Retained by CRAs

Equifax, one of three major CRAs, maintains a separate, private database of salaries on more than 33% of adults in the U.S.  The possibility exists that it could sell this information to lenders for the purpose of granting home mortgages or car loans.  This was such a major issue that several members of Congress wrote a letter to Equifax asking for proof that the company or its subsidiaries aren’t breaking personal privacy laws.  Both Experian and Trans Union deny that they collect salary information.

Consumers must first grant lenders’ permission to verify their incomes and job history before they seek such information.  This is typically accomplished during loan application.  Through its spokesman, Equifax says it abides by the Fair Credit Reporting Act (FCRA) and in response to congressional inquiries stated that it’s in “compliance with all applicable consumer protection laws.”



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