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if you are getting a mortgage. (x-posted at Buying or Selling a Home)

Beginning June 25, Fannie Mae's credit scoring models will start including your "trended credit data" which shows not only your monthly credit card balances, but also the payments that you make on those balances each month. Potential borrowers who do not pay off their credit card debt in full (aka 'revolvers') will be considered riskier (and therefore, less likely to qualify) than those who do pay off their balances each month (aka 'transactors'), all else being equal. These models will not differentiate between those carrying balances at 0% vs. those paying interest.

Fannie Mae contends that looking at credit card payments can even help those potential borrowers who previously had a late payment, but generally pay their credit cards off in full each month http://www.fanniemae.com/portal/about-us/media/commentary/03...

Giving weight to how borrowers pay off credit debt puts more power in their hands to control their credit evaluation. Payment delinquencies are a significant factor in credit scores, and borrowers can do nothing but wait for the delinquencies to grow ever farther back in time. But when trended data is considered, by paying credit card balances in full or in large part for a few months, borrowers can demonstrate that a late payment was not deeply reflective of their general debt repayment ability and behavior.

Based on Fannie Mae’s analysis, borrowers can potentially improve their evaluation by the DU credit risk assessment each month by paying off credit card bills in full.


AJ
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Fannie Mae contends that looking at credit card payments can even help those potential borrowers who previously had a late payment, but generally pay their credit cards off in full each month..

THIS!!

Better off you have no late payment at all but this has happened to me/us within the last decade. When we relocated from LI to the Boston Metrowest area in late 2007, we ended up needing to take a mortgage on this house pending the sale of our LI home. In order to *simplify* our lives my husband decided that the way to go with mortgage repayment was online as opposed to writing out a check and mailing it every month as I had done in Days of Yore.

He duly set the account up and inadvertantly/carelessly (depending on who you listen to) transposed 2 digits on the account number. We picked it up before the next payment was due just because I couldn't fathom why our mortgage payment hadn't been taken from our bank account and we found the error. Still showed up as a late payment.......and stayed there on record despite my husbands protestations that it was a mistake and *should've been obvious* (!!?!) Made no difference subsequently as far as far as I can tell......other than priming me for double checking such things since we are once again in the throws a sort of similar transition (small mortgage on our *retirement* home......covered by tenants pending the day I can get dh to commit to becoming an OAP)

If this reads like a wordy response/timely warning.......try to imagine everything I've left out ;)
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He duly set the account up and inadvertantly/carelessly (depending on who you listen to) transposed 2 digits on the account number. We picked it up before the next payment was due just because I couldn't fathom why our mortgage payment hadn't been taken from our bank account and we found the error. Still showed up as a late payment.......and stayed there on record despite my husbands protestations that it was a mistake and *should've been obvious* (!!?!)

Well, our credit reports are, after all, record of our payment histories. They are not records of our willingness, of our ability, or of our typing skill.

xtn
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David
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