Pulling Credit

 One of the tasks of a Loan Specialist is to pull credit, which I will dive into in this post.  Pulling someone's credit gives you an entire look as to how well they repay their loans, whether they be credit cards, auto loans, student loans, mortgages, or other types of loans.  Anytime you have to give your social security number and you receive money, goods (home or automobile, generally) or a service, you get a loan put on your credit profile.  I'm going to talk about what a loan specialist should look out for, some helpful tips, and anything else I've learned from my experience being a loan specialist.

Before pulling a client's credit, you should have their expressed written/electronic or verbal consent before doing so.  Just because they fill out an application and provide their SSN does not mean they consent to the broker/lender pulling their credit.  Some loan application servers and portals ask the borrower automatically if they consent to the broker pulling their credit, which when they do, generates a mini document stating they consent to a credit check.  That alone is good enough as proof that the borrower gave their consent, so long as there is one for each borrower on the loan.  

When pulling a client's credit, their basic information must be entered into the credit agency's system.  Different credit agencies will require different information, but all should require the client's legal first and last name, social security number, and date of birth.  Some will also require the client's address history, like the one we use.  Some may also require the subject property's address.  All of this information should be entered accurately and carefully, especially the spelling of the client's name and the entry of their SSN.  

In today's modern age, the credit pull should not take long.  At our agency, it takes ten seconds, give or take a few seconds.  The credit results should then appear.  Mortgage lenders use three credit bureaus to see a client's credit profile: Transunion, Experian, and Equifax.  They will each come up with a unique score, but should all find the same debts and loan history on the client's credit profile.  The lender will use the median of the three scores for the borrower's FICO score.  If there are multiple borrowers, they use the lowest of everyone's median scores.  

Something that may happen is a borrower's credit may show up frozen or locked.  Freezing or locking credit helps prevent someone from using your SSN to obtain a new debt.  Depending on the lender and how many of the three scores are frozen, the client may have to unfreeze/unlock some or all of their credit scores.  Some lenders require all three to be unfrozen/unlocked, some require two, and there are even some that require just one.  But all of them require at least one to be unfrozen or unlocked.  The client would then simply have to be reached out to to unfreeze or unlock their credit.  If they locked or froze their own credit, they should know how to unlock or unfreeze it.

A client's list of debts should appear on their credit profile.  Obviously, fewer is generally better, but it's more important to have lower balances than fewer open debts.  But both affect your score.  Any missed payments should also show up.  Generally, missed payments themselves don't disqualify someone from being able to obtain a mortgage loan, unless their primary mortgage (say, the one they're refinancing) had a missed recent payment.  

There are three main types of debts that will show up on someone's credit profile, although they are just the most common.  They are revolving charge accounts, installment loans, and mortgage loans.  Revolving charge accounts are just credit cards that you can zero the balance on, charge a payment to, and keep paying off.  Installment loans are loans that once they get paid off, disappear and no longer have to be repaid, but a record of them will still remain in your credit history.  The most common installment loans are auto and student loans, but you can also obtain loans for most large purchases including other vehicles, furniture, or remodeling.  Auto leases technically are installment loans, but usually get a different designation because they don't disappear off credit once fully paid off--generally, you have to close your account with the leasing auto company.  And of course, there are mortgage loans, any loan acquired from a lender or bank for purchase of real estate or property.  They function a lot like installment loans that just need to get paid off.  

Basically, there's not too much to teach about credit profiles.  It's more something you learn with experience.  It helps to review the lending agencies (Fannie Mae and Freddie Mac) guidelines regarding credit.  Often times, people with solid income histories and people who can get you any document you need tend to have great credit profiles.