Long-ago bank­ruptcy still haunt­ing cou­ple’s credit re­port

The Palm Beach Post - Residences - - Residences Central - DavidW. My­ers

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

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