Homeownership Criteria: Reasonably Good Credit
Habitat Wake adheres to a homeowner selection process that chooses applicants who have a need to improve their housing situation and have the ability to pay a modest monthly mortgage payment. Applicants must demonstrate four qualifications:
- Must have lived or worked in Wake County for a year prior to applying;
- Must have a need for housing;
- Must have the ability to pay a mortgage; and
- Must be willing to partner.
To determine an applicant's ability to pay a modest mortgage, Habitat Wake will verify that the applicant has a reasonably good credit history. Reasonably good credit means that the applicant has:
- no non-medical collections, items and accounts less than $1,000 (if any exist, applicant must payoff prior to applicant's house being built)
- no unsatisfied judgments on credit report or civil records
- the ability to manage any outstanding credit within a budget
Obtain a Free Credit Report
If you are applying for a home and would like to know your credit history, the best approach is to obtain a credit report that specifically lists your credit arrangements and your successes/failures making payments as agreed. Habitat Wake cannot provide this report to you; you must request a report from a separate agency.
This is a good opportunity for you to confirm your credit report is accurate. (Research shows that 79% of credit reports contain errors and 25% of these errors are serious enough to cause denial of credit!) Checking your credit report to make sure it is accurate and taking action to resolve credit problems are critical steps in the process to becoming a homeowner. (Also, with reasonably good credit, you could pay a lot less for car and house loans as well as car and house insurance.)
Beginning September 2005, everyone in North Carolina became entitled to one FREE credit report from EACH of the credit bureaus every 12 months. The three credit bureaus that provide credit reports are Equifax, Experian, and TransUnion. To request a credit report you can go online or call the authorized agency that provides free credit reports. (Habitat Wake cannot provide credit reports to applicants.) Here's how to request your free credit report:
- Go to this website: www.annualcreditreport.com and follow instructions
- Toll free call: 1-877-322-8228 and follow the automated voice prompts to request that a copy of your credit report be mailed to you
The agency that runs this website and call center is the only authorized agency that can process free reports. Via the website or phone, you will be asked to provide:
- your name,
- your current address,
- your Social Security Number,
- your date of birth, and
- information only you would know, such amount of your monthly car payment. (Requesting information that only you know helps prevent others from accessing your credit history).
Protect Your Credit Account Information
Protect your personal information and account information from being used by others. Beware of advertisements that you see with similar names, websites, or phone numbers! Never give out personal information to any other company claiming to process free credit reports.
Credit Report Review by Habitat Wake
Most creditors report to all three bureaus so reviewing your credit report from any one of these bureaus would be helpful. Currently, Habitat Wake evaluates the credit history of applicants by using reports from Equifax. In the future, Habitat Wake will look at "tri-merge" reports that combine information from all three credit bureaus.
Only Habitat staff will review credit reports. When reviewing an applicant's credit history, Habitat Wake staff will look for:
- Non-medical collection items and collection accounts less than $1,000
- No unsatisfied judgments (Habitat Wake staff will also review an applicant's civil records.)
- If a Chapter 7/13 bankruptcy is listed, it must be two years past discharge
- If a mortgage is listed, it must be three years since a house was owned
- Loans and credit cards "paid as agreed" with few or no late payments
If approved for a Habitat Wake home, the applicant must continue to meet these credit criteria until Habitat Wake closes on the applicant's Habitat home. In addition, the applying homeowner must pay down to $0 all non-medical collection items before Habitat Wake will start construction of an applicant's Habitat home.
Credit Problems
If your credit does not meet the criteria outlined and you apply for Habitat homeownership, then your application will not be approved. If you have minor credit problems, it may take you three to six months of resolving the issue to get your credit in good standing; more serious problems will take longer. You will be welcome to re-apply once your credit report reflects that you have reasonably good credit.
If you need help to resolve credit issues, there are organizations who do not charge for helping. Please consider working with a consumer credit agency, such as Triangle Family Services that can help you resolve credit issues free of charge. (Triangle Family Services is a local United Way agency helping families and children throughout the Triangle. Contact the organization at 919.821.0790 or www.tfsnc.org.)
