Mortgage Frequently Asked Questions

• What is the difference between pre-qualifying and pre-approval?
• What are credit scores?
• How can I increase my credit score?
• What if there is an error on my credit report?
  

What is the difference between pre-qualifying and pre-approval?
A pre-qualification for a specific loan dollar amount is based on a review of basic financial information you supply to us. No verification of the information is performed. The pre-qualification means that if the information you supplied to us is accurate, subject to verification of credit, appraisal of the property, and the lenders underwriting criteria for the loan amount, you should be able to receive a loan as described in the pre-qualification letter. This is not a final approval. A pre-qualification is not a commitment to lend. However, a pre-qualification letter indicates to you and the seller that in the opinion of the loan officer you are qualified to purchase the house you are making an offer on.

What are credit scores?
A credit score such as FICO (developed by Fair Isaac & CO) is a credit scoring method of determining the likelihood that a credit user will pay their bills. Fair Isaac began its pioneering work with credit scoring in the late 1950’s. Since then scoring has become widely accepted by lenders as a reliable means of credit evaluation. A credit score attempts to condense a borrowers credit history into a single number. The exact computation is unknown and may vary when purchasing a car, obtaining your score on line, or purchasing a home from lender to lender.

How can I increase my credit score?
There are a number of ways that you can increase your score:

1. Close accounts you no longer use.
2. Keep a 50% or less balance from your credit limit.
3. Make larger than the minimum payment required.
4. Pay off debt with a home equity loan. Discover Lending has great Equity Loans available.
5. Do not apply for too much credit with the exception of a home or an automobile. In the past applying for a home or automobile would affect your credit score because typically a borrower will shop around. This problem has been corrected in the credit scoring calculation. The program now recognizes (for the most part) auto financing and mortgage financing inquiries so long as they occur around the same time. Therefore, they do not count multiple inquiries against you if you are shopping for a home or automobile.

What if there is an error on my credit report?
If there is an error on your credit report the first thing you want to do is to request a copy of your credit reports from all 3 bureaus. There are links to these sites on our Main Page. These reports are little to no cost and very easy to order. When you receive your reports there will be a dispute form attached. All you have to do is fill out the form and attach any documentation you have proving your case. You should here back within 30 days. At Discover Lending if you are purchasing or refinancing a home and need your score updated fast, we have a Quick-Score program available where we can update your score through our Credit Reporting Service as soon as 7 working days!