Credit Events and Derogatory Credit
This is the part of things that tend to worry homebuyers the most – explaining and documenting past credit events that, likely, surround a difficult time in your life.
No one is excited about explaining what was going on during difficult times, but let me assure you, we aren’t going to judge you for those experiences.
The underwriters understand that life happens and sometimes those happenings can lead to times where making sure all your bills were paid in a timely manner isn’t at the top of your list of things to attend to. But part of their job is to put the pieces of the story together to determine if, when life happens again, you’ll be in a better place to handle it, which means your loan officer or processor has to ask for explanations and documentation from you regarding those times.
The main examples of credit events resulting in derogatory credit are divorce, severe illness, identity theft, bankruptcy, and foreclosure.