Credit Tradelines Requirements To Qualify For Mortgage Loans

This BLOG On Credit Tradelines Requirements To Qualify For Mortgage Loans Was UPDATED On July 17, 2017

Credit Tradelines Requirements are individual creditors that is reporting your credit history on consumer credit report.

  • For example, if a consumer has a Blue Sky Visa secured credit card, Blue Sky will be posting credit payment history on credit report. 
  • Most creditors post to all three giant credit reporting agencies, which are Transunion, Experian, and Equifax.
  • The credit grantor will post credit limit, credit balance, minimum monthly payment, date of last activity, and payment history. 
  • The more credit tradelines consumers have, the stronger and better their credit profile is.
  • One late payment on credit tradeline will hurt credit scores and the derogatory report will remain on consumer credit report for 7 years.
  • There are no credit tradelines requirements on the number of credit tradeline for a mortgage loan borrower to have to qualify for a mortgage loan.
  • Many mortgage lenders will have overlays and require at least three to four credit tradelines requirements that have been seasoned for 12 to 24 months.

Do Mortgage Lenders Require Minimum Credit Tradelines Requirements?

Credit Tradelines are normally required by individual mortgage lenders as part of their own lender overlays.

  • Mortgage lenders with no lender overlays do not require credit tradelines and just go off the findings of the Automated Underwriting System (AUS).
  • Mortgage Loan Applicants who have no tradelines but get an approve/eligible per Automated Underwriting System can qualify with a lender with no overlays.
  • The Gustan Cho Team has no overlays on government and conventional loans.

Lender Overlays

  • Mortgage lenders do have minimum credit tradeline requirements as part of their own lender overlays.
  • Most mortgage lenders require a minimum of 3 credit tradelines requirements.
  • There are numerous mortgage lenders that will require 4 credit tradeline.
  • Others have higher credit tradeline requirements.
  • Some mortgage lenders may require a 12 month seasoning on credit tradelines while other may require 24 months.

Do Lenders Require Credit Tradelines Requirements?

Besides having minimum credit trade line requirements, mortgage lenders also have credit tradeline seasoning requirements.

  • The majority of mortgage lenders require that mortgage applicants have at least one year’s worth of seasoning for each credit tradelines. 
  • For example, if a mortgage borrower recently got a Visa credit card and had it for six months, that would not count towards their credit tradeline requirement. 
  • They require that mortgage loan applicants have the credit for at least a year without any late payments. 
  • Mortgage lenders rate borrower’s risk level by reviewing credit tradeline for the past year.

What If I Do Hot Have Three Credit Tradeline That Have Been Seasoned For A Year?

Mortgage Loan Applicants who do not have 3 credit tradelines that have been seasoned for a year, there is still hope.

  • Few mortgage lenders will make exceptions if other aspects of borrower’s credit profile are strong with compensating factors. 
  • Compensating factors are positive factors.
  • Examples of compensating factors is low payment shock, reserves, second job that is not used for income.

Non-Traditional Credit Tradeline

To substitute credit tradeline, we can use rental verification or non traditional credit tradeline. Examples of non-traditional tradelines are the following:

  • Cellular phone bill
  • Cable
  • Internet Bill
  • Utilities payment
  • Other documented monthly payment bills that has been paid with check and/or direct deposit for past 12 months with no late payments

Whenever rental payments are made or other monthly payments, please pay them by check so it can always be tracked and verified. Cash payment is non existent in the mortgage world. Mortgage lenders will always want to see cancelled checks as proof of payment.

Mortgage Borrowers who need to qualify for mortgage loan with a lender with no lender overlays, please contact us at 1-800-900-8569 or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays.

Related> Credit Tradeline

Related> What Are Credit Tradelines?

Related> Non-Traditional Credit Tradelines

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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