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Michael Kling

New Law Forces Lenders To Explain Impact of Credit Scores

Tuesday, January 4, 2011 - Article by: Michael Kling - Total Mortgage - Message

Beginning on January 1, 2011, mortgage professionals are being required to disclose to borrowers how borrowers' credit scores could possibly prevent each individual from securing the best possible mortgage interest rates.

The purpose of the credit score alert is to alert mortgage seekers about the significance of their credit score on mortgage interest rates and give the borrowers an opportunity to improve their score or if desired they may rethink their loan.

The reality is that the alert system will more likely than not be yet another government-backed legislation becoming unrecognizable in the large stack of documents that applicants robotically sign and date with little attention.

Instead of depending on an overlookable document, mortgage borrowers would be smart to check their credit reports prior to looking to find mortgages. To improve their credit scores, borrowers are recommended to correct any credit mistakes and pay down credit card loans but leave the accounts open due to the fact that larger lines of credit relative to debt used is better for credit. How to raise your credit score.

Regardless of government regulations, many reputable mortgage professionals alert borrowers of any issues concerning their credit score and, if possible, make an effort to help borrowers in efforts to better their scores. This demonstrates why working with an experienced, consumer-focused mortgage professional is extremely important.

The media's coverage of the matter gives a dreary welcoming for the new requirement. The credit reporting industry also seems unimpressed.

Mortgage lenders have been given moderate slack in disclosing credit alerts, but the papers will most likely show home buyers and homeowners refinancing their current mortgages how their credit score compares to other loan candidates, any possible factors that may drive down their credit score, a reminder that they posess the right to challenge discrepancies they realize on credit reports, and different ways to reach the three national credit bureaus. Mortgage candidates may addiaionally see a document detailing the methodology used to calculate their scores.

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