Long-ago bankruptcy still haunting couple’s credit report
Question: The application that my wife and I filed for a mortgage was rejected after the lender found out that I had filed for bankruptcy 13 years ago. The bankruptcy doesn’t even appear on my credit report anymore. How did the lender find out about it? Is it legal for a bank to consider a bankruptcy if it has been removed from a report?
Answer: Yes, it’s legal for a lender to consider a bankruptcy even if it no longer appears on an applicant’s credit report. Most bankruptcies stay on a consumer’s report for up to 10 years. However, some lenders, while reviewing a loan application, supplement their research through other sources, including the use of firms that specialize in checking an applicant’s court history.
These searches can uncover all sorts of information that might reflect poorly on a potential borrower’s creditworthiness. This info includes not just a long-ago bankruptcy but old judgments, or even prison stints, that don’t appear in the applicant’s current credit file. Most banks don’t go to such lengths unless they have unusually strict lending standards, the requested loan amount is very large, or the loan officer thinks that something is suspicious about the application or the borrower.
‘Field of dreams’
Q: Is it true that the baseball field used in the movie Field of Dreams is for sale?
A: Yes. Universal Studios built the complex in a cornfield in eastern Iowa for the 1989 hit starring Kevin Costner. But the folks who own the land are getting ready to retire and recently listed it for sale at $5.4 million. In addition to the baseball diamond and stands, the 193-acre parcel includes a two-bedroom house, several out-buildings and the mystical cornfields from which “Shoeless” Joe Jackson and other past baseball greats emerged to play ball in the film.
Order inspection, then appraisal
Q: Our offer to purchase our first home was accepted a few days ago. We followed your advice by making the offer contingent on getting a satisfactory home inspection before the deal can close. The bank, of course, needs to order an appraisal. So what should we schedule first: the inspection or the appraisal? Also, how much will the inspection cost?
A: A typical home inspection costs $300 to $500, the U.S. Department of Housing says; an appraisal costs a similar amount. Try to schedule the home inspection first. That way, if the inspection turns up so many problems that you decide against buying the property, you can cancel the sale and get back your deposit without incurring additional costs for the appraisal and other services.
Q: I have been looking for a new job lately. Nearly all of the companies that I have interviewed with have asked me to sign a waiver that allows them to get a copy of my credit report. I have a good score and have nothing to hide, but I worry that all these recent inquiries will lower my score. Will it?
A: No. Inquiries made by potential employers will appear only on a personal report that you can order from a credit bureau. They won’t appear on any report that an employer or a lender might order in the future. This will protect your job-hunting privacy and prevent any damage to your credit score.
Q: I am in the process of buying a home, which I will immediately rent out to a friend. Does the lender have to know about my plan?
A: Yes. Lenders usually charge a higher interest rate, or use stricter underwriting guidelines, for borrowers who plan on renting out a home rather than living in it themselves. This, in part, is because they’re concerned that the borrower might not be able to continue making payments if the tenant moves out.
Failing to notify the lender about your plans would constitute mortgage fraud. This could lead to heavy fines or even prison.
David Myers is a King Features columnist.
Concern over credit inquiries
Don’t keep lender in the dark