Credit Tradelines Requirements To Qualify For Mortgage Loans


Credit Tradelines Requirements To Qualify For Mortgage Loans

This BLOG On Credit Tradelines Requirements To Qualify For Mortgage Loans Was UPDATED On December 13th, 2018

Credit Tradelines Requirements are individual creditors that is reporting consumer credit history on consumer credit reports:

  • 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
    • Equifax
  • The credit grantor will post the following:
    • credit limit
    • credit balance
    • minimum monthly payment
    • date of last activity
    • payment history
  • The more credit tradelines consumers have, the stronger and better their credit profile of consumer
  • One late payment on credit tradeline will hurt credit scores
  • 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 borrowers to have to qualify for a mortgages
  • Many 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 lenders as part of their own overlays.

  • Lenders with no overlays do not require credit tradelines
  • They 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 at Loan Cabin Inc. has no overlays on government and conventional loans

Lender Overlays

  • Some lenders do have minimum credit tradeline requirements as part of their own overlays
  • Most lenders require a minimum of 3 credit tradelines requirements
  • There are lenders that will require 4 seasoned credit tradelines
  • Others have higher credit tradeline requirements
  • Some 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, lenders may have credit tradeline seasoning requirements.

  • The majority of lenders require that mortgage applicants have at least one year’s worth of seasoning for each credit tradelines
  • For example, if 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. 
  • Lenders rate borrower’s risk level by reviewing credit tradeline for the past year

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 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.

Borrowers who need to qualify for mortgage loan with a lender with no lender overlays, please contact us at 1-262-716-8151 or text us for faster response. Or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays.

Related> Credit Tradeline

Related> Non-Traditional Credit Tradelines

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