Mortgage Info for Homes and Small Business Financing

What are Credit Supplement Reports?

Every borrower should expect their credit report will be reviewed as part of the mortgage underwriting process.

The lender’s underwriter wants to know how much debt, what kind of obligations and whether you have been paying the loan(s) as agreed.

What you might not know is this information will be reviewed more than once.

Credit Supplement Reports

Today, more than ever there is great interest in what happens to a borrower between the initial “pull” of the tri-merged credit report at application and their settlement closing date which is typically 30 to 60 days later.

Your credit will be checked again after the initial “pull”.

It’s not that lenders don’t trust you;  Fannie and Freddie don’t and the lenders are covering their butts trying to avoid the possibility of buying back your loan.

Credit report supplements may be used to confirm the terms of any new debt as indicated by the existence of inquiries within the past 120 days.  Primarily, supplements are used to confirm the continued and on time payment of any and all mortgages that the borrower may be obligated to pay.  This is particularly true for a refinance.

We know of one lender that will re-pull your credit just before your loan goes into pre-closing Quality Control.  That new credit report is compared to your initial report and any substantial differences are noted and will need to be explained and/or documented.

Credit supplements result in additional costs.  Both situations can extend the number of days until settlement depending on what is found or how difficult it is to extract the required information.

Borrowers need to be aware

The time after the initial credit report and settlement is no time to incur large, unusual purchases such as a car or furniture.  These kinds of activity have been known to delay or derail transactions.

It’s a tempting situation with the new home purchase; a larger space needs new furniture, washer and dryer, maybe a new larger screen television.  There’s also window treatments and bedding.  Even if the offer for the furniture has no payments for a year, it doesn’t matter.  Underwriting requirements mandate counting some payment against you for the new debt.  This new, additional payment might throw off your debt-to-income ratios and prevent the lender from funding the new loan.

Take care and Be aware!

Don’t jeopardize your settlement with new credit until after closing AND funding of the loan.

 

Facebooktwittergoogle_pluslinkedinmail

4 Responses to What are Credit Supplement Reports?

  1. Can supplemental reports be used to resurrect info that has already been purged from a credit report? Also, is the borrower entitled to see and/or receive a copy of the supplement?

    • Hi Bob,

      Thanks for your very interesting questions. The main purpose of credit supplement reports is to update any information that has occurred since the original credit request. Items of interest typically include mortgage payment history and to validate the terms of any new credit that may have been identified.

      Our credit reporting company says they will add new account information but will not typically add info from old accounts that have been deleted or purged from your record. MetFund will provide you with a copy of any report you have paid for as a matter of policy. Our credit reporting firm will also forward a copy upon request but only to the address on the report.

      For more information regarding your rights under law, please see our article entitled How The Fair Credit Reporting Act Protects You | FCRA

  2. Was wondering if you could answer a question for me, I am in the middle of getting a mortgage, I had my credit pulled Oct. 5th by credco/corelogic, I am very anal about my credit and wanted to know how long that report would be good for before we proceeded, they stated it would be good for 120 days, they also said they would be updating the info on that report to show any new debts or inquiries. I guess this is called a refresh or credit supplement report and should not result in another hard pull or so they told me. Yesterday I received a notification that another hard pull has been added to my reports by the same company and my mortgage lender insists that it was not a hard pull but the inquiry is there on credit karma and my standard credit report. Should a credit refresh result in another hard pull or did someone make a mistake?

    • Thanks, Joshua for your inquiry. Your question illustrates the ‘complexity’ of credit supplements.

      The confusion may rest with the naming of how mortgage practitioners order supplements. We mortgage originators request a supplement and maybe your lender / loan officer believed that’s all that’s involved. But to generate a supplement the credit reporting bureau must update the information contained in the report. That requires a new “pull” on your credit or so I have been told by our credit reporting vendor.

Leave a reply

Tips, Tricks and Mortgage MoJo
Get the latest content first.
Your privacy is always respected.