CELL PHONES & MORTGAGES, NOW ‘CONNECTED’ Historically credit reports never reported cell phone, rent, and utilities repayment history. Recently a new client of ours came to us after being declined by their bank as they were told that they had unsatisfactory credit. No further explanation was given. This is what the banks do. They leave you in the dark wondering what went wrong. Well, as it turned out John’s cell phone account had been reported on his credit report. It’s a sign of the times folk, where qualification guidelines continue to tighten further. Not only are cell phones now included on credit reports now but lenders are now taking into account (the average payment) into debt service calculations as they view cells as a form of credit. We are all well aware that billing mistakes commonly occur with cell carriers some which can go unnoticed for months at a time. Worse, this new move includes showing cell phone repayment history for the past 7 years. So someone who missed payments many years ago, perhaps for a good, legitimate reason, can be declined for a new mortgage today. Highly unfair we say. Typically monthly payments can be as low as $35. Not much credit is it? The cell used to be the one thing people could dispute when one got unfairly charged and refused to pay. Well we can’t do this anymore or our overall credit will suffer. Parents tell your kids; in fact everyone you know to make sure their cell account is paid on time. Spread the word. Same thing with student loans. They can hurt credit, not just students but parents and family who have co-signed. Co-signing is now more dangerous than ever because while your child may be the one making monthly payments, if they screw up and you are unaware, your credit will suffer as well because you are considered equally responsible for repayment. If one’s credit history is ‘soft’, in other words you have had some issues but are still approvable by some lenders; the cell has become the tipping point. We did manage to get our aforementioned new clients approved with one of our non-bank institutional lenders. This is but one of many examples of instances where the Bank may say ‘NO’, but we say ‘YES’.
CELL PHONES & MORTGAGES, NOW ‘CONNECTED’
Posted by: Tracy Luciani Price