Common use of Credit History Clause in Contracts

Credit History. The applicant must have a credit history which indicates a reasonable ability and willingness to meet obligations as they become due. (1) Any or all of the following are in- dicators of an unacceptable credit his- tory unless the cause of the problem was beyond the applicant’s control and the criteria in paragraph (d)(3) of this section are met: (i) Incidents of more than one debt payment being more than 30 days late if the incidents have occurred within the last 12 months. This includes more than one late payment on a single ac- count. (ii) Loss of security due to a fore- closure if the foreclosure has occurred within the last 36 months. (iii) Outstanding tax liens or ▇▇▇▇▇- ▇▇▇▇▇ Government debts with no satis- factory arrangements for payments, no matter what their age as long as they are currently delinquent and/or due and payable. (iv) A court-created or affirmed obli- gation (judgment) caused by non-pay- ment that is currently outstanding or has been outstanding within the last 12 months. (v) Two or more rent payments paid 30 days or more past due within the last 3 years. (vi) Accounts which have been con- verted to collections within the last 12 months (utility bills, hospital bills, etc.). (vii) Collection accounts out- standing, with no satisfactory arrange- ments for payments, no matter what their age as long as they are currently delinquent and/or due and payable. (viii) Any debts written off within the last 36 months. (2) The following will not indicate an unacceptable credit history: (i) ‘‘No history’’ of credit trans- actions by the applicant. (ii) A bankruptcy in which applicant was discharged more than 36 months before application. (iii) A satisfied judgment or fore- closure with no loss of security which was completed more than 12 months before the date of application. (3) The Lender may consider miti- gating circumstances to establish the borrower’s intent for good credit when the applicant provides documentation that: (i) The circumstances were of a tem- porary nature, were beyond the appli- cant’s control, and have been removed (e.g., loss of job; delay or reduction in government benefits or other loss of in- come; increased expenses due to ill- ness, death, etc.); or (ii) The adverse action or delin- quency was the result of a refusal to make full payment because of defective goods or services or as a result of some other justifiable dispute relating to the goods or services purchased or con- tracted for.