Credit Corner: Reason Codes

At the top of each Residential Mortgage Credit Report just underneath the credit scores are a list of reasons why the borrower’s credit score is not higher. Typically, four “Reason Codes” are listed underneath each credit score. These scores are extremely useful in letting a borrower know what he/she can do to improve their score. For example, if a credit card is maxed out, the reason code will indicate the balance of the the revolving account is what is limiting the score. The lower the score, the more helpful the Reason Codes will be. Likewise, the higher the score, the less impact the codes will have. Understanding the reasons given in the Reason Code section is the first step to improving one’s credit score!