Section outline

    • Students must
      Mark as done
      Credit Report vs. Monitoring Tools
      🗓️ Recorded: 4/27/2020
      ⏱️ Est. Time: 18 mins
      🚩 Report Issue

      Credit Reports: What an LO sees?

      Discusses why lenders must pull an official credit report, emphasizing that consumer-facing monitoring tools are often inaccurate and lack the granular detail required for mortgage underwriting.

      What this session covers:

       
      The Inaccuracy of Consumer Tools Most people rely on monitoring systems like Credit Karma, which can be off by as much as 150 points compared to an official lender pull.
       
      Credit Impact of a Pull Concerns about credit score "hits" are often exaggerated; a mortgage credit pull typically results in only a minor, temporary reduction of three to five points.
       
      The Debt-to-Income (DTI) Factor Credit reports pull in actual minimum monthly payments, which directly affect DTI ratios, often surprising borrowers who only know their total debt amount.
       
      Authorized User Risk Borrowers are often unaware that being an "authorized user" on someone else's account can negatively impact their own score if that account has late payments or high utilization.
       
      Medical Collection Management Medical collections are unique because they do not affect DTI, and many collection companies will agree to "pay for deletion," effectively removing the derogatory mark entirely.
       
      The "Shotgun Blast" of Inquiries Applying for financing through auto dealerships often leads to dozens of inquiries at once, which can significantly damage a credit score.