Your mortgage is generally reported to the major credit-reporting agencies each month, just like any other loan or line of credit. And, so long as you're making all of your payments on time, its presence will help you build credit and secure affordable financing down the road.
There is an outside chance, however, that your mortgage might not make it onto your credit report. Here are two reasons why.
1. Your loan is in someone else's name
When you apply for a mortgage, your name and Social Security number are tied to that loan for its term or until you sell or refinance the property. Once the loan is made, your lender is not permitted to arbitrarily change its terms by adding or removing a borrower.
Take a married couple, for example. Let's say, they put their mortgage in the wife's name only because she had a better credit score or income at the time of the application. Were she to pass away, the husband would not simply start to get credit for any payments they made, given he wasn't on the original mortgage.
He would likely need to refinance to get the servicer to report his payments, though he doesn't necessarily have to do so. While executors must generally notify creditors of a borrower's death, there are protections in place that prohibit lenders from calling mortgages due. And, if the husband is bequeathed the home or is on its title, the lender may simply allow him to continue making mortgage payments -- just without reporting them to the credit bureaus.
2. Your loan servicer changed
The residential mortgage market is built on two pillars: loan origination and loan servicing. Loan origination is the creation of mortgages, which are then bundled, securitized, and sold in the secondary market. The loan servicer collects the borrower's payments for the benefit of the investor. They are the equivalent of a property manager collecting rent for the property owner.
Your servicer may change many times throughout the term of your mortgage. Here's why: your loan is one of many loans in a massive portfolio. When servicers need cash, they sell a portion of their portfolio to another servicer. You generally receive notifications (snail mail, email, and calls) informing you of the change along with new information for payment purposes.
Many mortgage companies sell your loan right after origination to another investor; others keep your loan on the books permanently or sell them to generate cash down the road. It is very common for your mortgage not to show up on your credit report in the 60-day window after a loan servicing change.
In this window, it can appear as though you don't have a mortgage on paper. This is nothing to worry about initially, since the mortgage should reappear once all the paperwork is complete and the new servicer starts reporting your payments.
However, the lapse could pose an inconvenience if you were to refinance in the interim. The absence of your mortgage could hurt your credit score and it can be somewhat difficult to figure out who your lender is for payoff purposes. In most cases, if the loan is with the new servicer, it would be the lender providing the pay off.
No matter what the case, you want to check your credit reports regularly to be sure your mortgage is being reported correctly to the credit bureaus. You can do so by pulling your credit reports for free each year at AnnualCreditReport.com and viewing your credit scores for free each month on Credit.com. You can go here to learn what to do if you spot an error on your credit report.
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