April 25th, 2019 6:28 PM by Eric Willner
Radio Show Notes 4/25/19 Thursday: Can you get a Mortgage With No Credit History?
Read a summary of the show below or
Getting a Mortgage with no credit history can be a challenge, but it is not impossible. Today, The Real Estate Show busts the myth about getting a Mortgage with no credit history. By creating and documenting a good history of on time payments using a few good tips and a little help from your landlord and utility companies, the house of your own can be closer than you think.
Usually, the first thing most lenders look at when you want to buy a house is your credit history. That includes your credit score and the history of payments you made which they used to calculate that score. Conventional knowledge and the media usually only talk about traditional or conventional forms of credit such as credit cards, auto loans, or a current mortgage. These traditional lines of credit are what usually form a track record of how people manage that.
However, what if you don’t have these traditional lines of credit? If you don’t have any credit history or you have what is sometimes called a nontraditional credit history, that is, one with no credit card debt or other kinds of loans, it will probably be harder to establish a set of measurable credit statistics. That will make getting a Mortgage with no credit history tougher in finding a mortgage lender who will work with you. But don’t give up! It’s not impossible. Plus, chances are you’re not starting from zero, as you may think, and there are creative ways to start and grow your credit.
I have found that many people underestimate what they have done, especially in the world of finance and credit. Even if you have no formal credit history, you have paid for things, correct? You probably have a track record of paying for essentials, like rent and utilities. There are ways for you to document these payments and use them to boost your credit. First of all, you need to stop paying things in cash. Credit card, debit cards, and Checks serve as acceptable documentation. If you have been paying two and Inc. larger apartment complex, a letter from them may serve as well.
Some credit agencies, like Experian, one of the three major credit reporting agencies, accept documented rental payment history as proof of credit history. There is a process, but your landlord has to opt into the system, and then report the payments as made regularly and on time. One of our partners, www.timetofixmycredit.com, can also show you how to document rent payments for a credit report. Doing this will change and improve your situation in getting a Mortgage with no credit history to someone who has a history, and the information is directly related to housing.
The bottom line is paying your rent and utility bills on time it shows responsibility and tells the story of how well you’re managing those payments. It also tells how well you manage other debts. This makes getting Mortgage with no credit history more likely. Furthermore, these types of payments establish a track record that Phico and vantage score have now started to include in credit scoring formulas. The idea that you need credit cards or other personal loans to qualify for a home loan simply isn’t true anymore, according to Rod Griffin, director of public education for Experian.
It’s also a good idea, for the future, to start building credit in the conventional way as well. It does not cost anything to access your existing credit history by going to www.annualcreditreport.com. This way you get a written snapshot of what credit history does exist, and make sure that there are no errors or in accuracies on the report.
Finally, I suggest you also check out the option of an FHA mortgage. People without a strong credit record can often get a mortgage backed by the Federal housing administration (FHA). FHA loans allow lenders to use nontraditional credit histories to qualify borrowers. To be successful, applicants must be able to show at least one year of no delinquency on rental payments. No more than one 30 day delinquency to other creditors such as utility or car insurance payments. And no collection accounts, other than medical related trade lines. FHA also requires that your debts (including your proposed mortgage payment) must not total more than 50% Of your total income. You must also have at least one months worth of cash reserves after closing on the mortgage. That includes closing costs and down payment.
As you can see, getting a Mortgage with no credit history IS possible!
Do these things, and If you are serious about real estate, then find out more on today and everyday’s episodes and learn more about Real Estate Investing and learn HOW TO by listening to The Real Estate Show with Eric Willner , Live every weekday morning at 8 o’clock (EST) on Florida’s Money Talk Radio station WSBR AM740, FM 96.9, and FM 103.9. You can also hear us on the free apps: iHeart Radio and TuneIn. Recorded Rebroadcasts are available 24/7 on Facebook. Please share our Facebook updates.
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Then check out these EXTRA cool resources:
TimeToFixMyCredit.com for Financial Education and Credit Improvement
AutomaticLandlord.com for Landlording and Real Estate Investment
MackBuysHouses.com for a fast cash offer on Real Estate
MackSellsHouses.com for great deals on Real Estate Investments
MackBargainHouseHunters.com to Partner on Real Estate Deals
Eric Willner is the Host and Founder of The Real Estate Show, an informative show about how to buy, own, and improve real estate the right way. You can reach Eric Willner at Eric@Ericwillner.com or 888-595-7779.
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