Lenders give consideration to present debts, or liabilities. Depending on the type of loan for which you apply, a lender will count any debt on which you must pay for more than 6 months. Car loans are among the most common liabilities in this category.
Before you arrive for mortgage application, list your liabilities, including loan numbers, monthly payments, balances and time left to run. Student loans are considered obligations if payments are presently due. Child support or alimony is considered an obligation.
Watch out for credit cards. Some lenders, for certain mortgage plans, may consider that you are liable for the potential full borrowing power on each of them. That can be true even if you carry no balances.
Your assets, debts and income allow the lender to judge whether you can make the proposed mortgage payments. The final question is : are you not only able but willing to meet your obligations? That's where your credit history comes in.
It is essential to divulge information about past credit problems frankly during your interview. You should have already discussed judgments or bankruptcies with the real estate agent during your first meeting. Such problems won't necessarily prevent you from obtaining a mortgage, but if the lender's checking turns up any lies, you're in trouble.
If you've never borrowed money, don't worry. An old wives' tale says you must take out a loan and repay it to establish credit. Lenders know, though, that you've been around long enough to get into trouble if you were going to. No credit history is considered good credit.