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3rd325 wrote:I'm new to the forum. I have noticed while there is a lot of knowledge of credit scores here. However, there seems to be a lot of common misconceptions as to what lenders consider when extending credit and industry terms.A little background: 5yrs in consumer lending; auto, credit cards, & mortgages; currently I'm an underwriter at JPMorgan in the HomeEquity division. I review applications all day and decide whether or not to extend credit and if so how much and what the rate be as well as any stipulations.Consideration will varry depending on the lender and the type of credit you are looking for.For secured loans, ie mortgages, home equity lines of credit, auto loans. When reviewing an application I consider: DTI (monthly debt as shown on the credit report divided by monthly income), Equity or LTV (loan to value - how much you owe on the home or car divided by the property's value), Credit scores, Time at residence, time at employer, type of employement.Since I work at a bank rather than for a broker or institution that provides only loans. I also consider deposit relationship (does the customer have a checking or savings account or any other loans or credit cards with the bank and are they in good standing). As far as checking accounts go: does the customer keep funds in the account or does money go in and right back out. A customer who keeps funds in the account is worth more to the bank than one just uses the account to cash checks.Mortgage brokers will be primarly concerned with: DTI, FICO, and length/type of employmentIf someone is applying individually then only their income and credit may be considered. If they are applying w/someone else; either a co-applicant or co-signer (coapps & cosigners are basically the same) then both incomes and credit history will be considered.Do not confuse co-app with AU (authorized user).A coapp or cosigner is also liable for the account. So if you apply for a loan with someone else you are BOTH resposible for the payment. If one doesn't make the payment the lender may go after either party for the entire amount. That is called sole & several: it means if one person can't pay the other is resposible for full payment, not just "their half". If you apply for credit elsewhere that loan will show up as yours even though you "only cosigned". That lender might require proof that the other person has been paying it for 6mths or a yr. Or they might say "tuff... that is your debt". When applying jointly it does not matter who is the primary. You both have equal liability.An authorized user, AU. Is only applicable to credit cards and lines of credit (unsecured lines of credit not HomeEquity lines of credit as HELOCs are a type of mortgage). Basically, if you have a credit card and add you spouse as an AU, You are saying to the credit card company "my spouse has my permission to charge on this account". But that AU is not liable for repayment of that account because they were not added as a coapplicant or joint account holder at the time the account was created. In other words their credit and income was not considered when extending you credit. Though their credit may benefit from being on your account. The account history will show on the AU's credit report, this is what Largo and other ICB's are selling to bring up people's FICOs. The fico of the cardholder (the original applicant) does not effect the AU's credit in anyway. Rather the AU now has a "seasonded" account in good standing on their credit.
I totally agree. This forum his heavy on credit repair and cc's. Nice to get the skinny on mortages.
FICO_Focused wrote:This is a good thread! And Barry should consider making it Sticky.Thanks for the info 3rd325Take Care.Rob