You took out a new mortgage and look forward to the payments helping your credit score. But when you look at your credit report shortly after taking out the mortgage, there’s nothing there. Just how long does it take to report on your credit report?
Typically, it could take between 30 and 60 days to show up on your credit report. The exact time depends on the busyness of the industry. If you open a mortgage during a rather busy time, it may take several months before they get to your file and report your new mortgage.
But, not all mortgages show up on credit reports. Why would this happen? Keep reading to find out more.
Some Lenders Don’t Report to the Credit Bureaus
If you take out a mortgage with a small, local bank, you may not see your mortgage on your credit report. There isn’t a law that states that they have to report the credit bureaus. If you aren’t getting your mortgage with one of the big banks, it’s worth asking the loan officer about the bank’s policy on reporting to the credit bureaus.
Some Lenders Only Report to One Bureau
There are three credit bureaus, but again, lenders aren’t required to report to any of them. Some lenders choose one bureau to report to and that’s it. This helps streamline their process. This could hurt you in the long run, though, if you were counting on using your mortgage to help beef up your credit score. Again, asking the lender about their policy beforehand can prevent unpleasant surprises.
You Used Seller-Financing
Some sellers are in a position that they can be your ‘lender.’ While this can be a valuable way to buy a home, it’s not going to help your credit score in the least. Reporting payments to the credit bureaus is a lengthy and expensive process that most sellers that offer financing won’t offer. If you use seller-financing because you have a low credit score, it’s like a double-edged sword.
Issues With Your Paperwork
Even though computers produce the paperwork necessary to close your mortgage, there is still room for human error. A misspelled name, missing name, or transposed social security numbers could all keep a mortgage off your credit report, even if the lender normally reports to the credit bureaus. If you know your lender reports mortgages to the credit bureaus, you may need to take up the issue with the lender to correct the issue.
What’s the Benefit of a Mortgage Reporting on a Credit Report?
You might wonder what the big deal is with the mortgage reporting on your credit report. If you make your payments on time, what’s the issue?
The largest issue is that your mortgage payments can really help your credit score. A mortgage is considered a ‘major credit line.’ In other words, if you make your payments on time for many years, your mortgage could really help your credit score. On the other hand, if you don’t make your payments on time, it could really hurt your credit score.
Either way, showing that you have a housing history is important, especially if you want to buy another house and get another mortgage. Most mortgage lenders rely on your housing payment history. They want to know how you handle this debt. While you could get verification from the lender regarding your payment history directly from them, it’s best when coming from a third-party, such as the credit bureau.
Most importantly, the credit score could help your credit score. Your credit score dictates what you can do financially. Whether you want to take out another mortgage, get a credit card, or take out an installment loan, you need a good credit score. You may even need a good credit score to get a cellphone or even get a new job. Your credit score does a lot for you and a positive mortgage history can help you get that high score that you need.
It’s in your best interest to talk to a lender before you close on a mortgage to find out if they report to the credit bureaus. If they do, follow up with the credit bureaus within a few months to see if the mortgage is reporting. If it isn’t, you should contact your mortgage company to find out the reason and to fix the situation.