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I have no credit score. Can I get a Mortgage?
Do you have no credit history but would like to qualify for a mortgage? There are numerous lenders that have no score programs for home loans, some even allow no money down. However, borrowers will be asked for non-traditional credit references such as utility payment history, telephone payment history, and other verifiable payment references.
In some cases having no credit score is better than having bad credit. Many people with no scores can show a history of timely payments for accounts that do not report to the credit bureaus. Most lenders will require 3-5 forms of non-traditional credit. You can obtain a letter from any company you pay a regular monthly payment to such as: electric, water, cable, phone, ISP, gas, cell phone, etc. Even other monthly bills you pay for something like a self storage facility can be used.
The lenders that will lend money to people for a mortgage and have no credit and no credit scores are not nearly as abundant as the lenders that will lend to people with credit and credit scores. This is one reason why using a mortgage broker makes the most sense. A mortgage broker will generally know which banks have programs for consumers with no credit or credit scores and they have the ability to shop between those banks that will lend to these types of borrowers and get the best financing for you. A mortgage broker will also know what is expected and what requirements those lenders will have so that they can find the lender that will fit your needs the best.
Fannie Mae's My Community program will allow you to use alternate forms of credit such as phone bills, utilities, and rent.
When using a loan program that does not require a credit score it will become very important that your rent payments be verified. Always make sure that you are making your rent payments in a trackable and verifiable manner. DO NOT MAKE YOUR RENT PAYMENTS IN CASH. Be sure to keep a file of all rent receipts and cancelled checks. Being able to prove that you have made twelve or even twenty four months of rent payments on time will go a long way in securing a mortgage when you have no other traditional credit tradelines.
When applying for an FHA insured mortgage, a lender is not allowed to discriminate against you for not using credit. Many people have become homeowners prior to having credit scores by using FHA loans.
There is a fee adjustment for no credit score for an FHA loan, however, it does not preclude you from obtaining mortgage financing.
» DISCLAIMER: The information contained in this article on 'I have no credit score. Can I get a Mortgage?' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.
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