New Credit Reporting Rules May Make Getting A Mortgage Harder

EATONTOWN, N.J. (CBSNewYork) -- It could soon be a lot harder to get a mortgage.

As CBS2's Emily Smith reported, credit reporting agencies are changing their rating system, and they are about to start looking a lot deeper into your personal finances.

To qualify for a mortgage to buy a home, it has always been about your credit score, and whether or not you pay the minimum on your credit card bills and loans each month. But now, millions of potential homebuyers' habits will be under a microscope, zeroing in on exactly how much you pay – and more.

"The problem with this is consumers don't know about it," said financial expert Paul Oster.

On-time payments won't be good enough anymore. It's a new credit scoring system called trended credit data, and it goes into effect June 25.

The first lender to do it will be Fannie Mae, one of the largest mortgage lenders in the nation. Oster said it is incredible how in-depth the tracking system will go into your history.

"Fannie Mae is going to look and say, 'Wait a second, Emily was only paying minimum payments and over the past two months, she got really aggressive and paid things down.' And you will get penalized for that," he explained. "They're also going to start using utility data -- all of it – your water, your electric, your sewer, is all going to be included on your credit reports."

Oster said even your cellphone bill will appear on credit reports, and a late payment to a company that doesn't even penalize you for it could now affect your interest rate.

Experts said if you think it is illegal for your utility company to share your payment information, you're wrong.

"There's these ginormous companies compiling this data and sharing it with the credit bureaus and government agencies," Oster said.

Oster showed CBS2 one of his own utility bills from Jersey Central Power & Light, and said he has looked at many other similar large companies. All of them tell consumers in fine print that their payment information is being shared.

"We will not disclose a customer's information without consent, except as required by law requested by regulatory agencies and government authorities or to be used for legitimate business purposes such as credit evaluations," Oster read in the fine print on the bill, before adding, "This is exactly what we are talking about."

It will go back two years or more. Licensed loan officer Bill Hendricks said a number of people looking to buy a home this summer won't qualify for a mortgage, or they will end up with a higher interest rate.

"It's always been on credit cards, student loans, mortgage payments," he said. "Now it's going to be on utility bills, and the public just isn't aware of it."

CBS2 reached out to Fannie Mae about the changes, and a representative said: "It simply makes sure responsible, solid lending is going on and we have a better understanding of the potential risks.

If you are somebody who pays all of your bills on time, including your cellphone bill, this will all work to your advantage.

The auto industry has already been doing what it calls "trended credit data" for years. But Fannie Mae said it is the first to do it in the homebuyer industry.

CBS2's expert said as of now, FICO, the company that generates our credit scores, is not yet using this model.