LOVELAND – A new concept is being introduced to the way credit history is evaluated. It’s called trended credit. If you’re looking to buy a home in the future, trended credit could help with your mortgage approval. Here’s what you need to know.

Credit considerations
Lenders review many important aspects of your credit. Two factors are your credit score and your payment history (whether you’ve made any late payments or if you historically pay on time). These two factors are not exclusive since payment history weighs heavily on your credit score.

Lending risk
Credit information helps lenders determine your risk level. They must evaluate how likely you are to pay your mortgage without defaulting. Late payments on credit cards are typically an indication of high risk.

What is trended credit
Trended credit is a new way of evaluating your payment history. It takes into account other behaviors that reflect your credit worthiness. For example, if you made a late payment in the past but have since made significant payments against your balances or consistently pay off your balance each month, trended credit would view your file more favorably.

Benefit of trended credit
Trended credit analysis gives potential home buyers the opportunity to improve their credit worthiness despite past mistakes. It can help buyers who may otherwise have difficulty getting approval for a home loan.

Preparing to buy a home
Trended credit was first announced in November of 2015, but it has not been fully implemented. If you are looking to buy a home, it’s time to start improving your credit payment trend by making larger payments on your credit card bills each month and, if possible, even paying off your balance each month. This will improve your credit trend and therefore improve your chances of obtaining a home loan. Contact your lender for more information on trended credit.

Suzanne Plewes is a broker associate at RE/MAX Alliance. Write to 750 W. Eisenhower Blvd., Loveland, CO  80537,  call 970.290.0373 or e-mail [email protected].