Nontraditional Credit Tradelines In Mortgage Qualification

This BLOG On Nontraditional Credit Tradelines In Mortgage Qualification Was UPDATED On November 14th, 2017

Is cash king? Not when it comes to qualifying for home loans. Mortgage Lenders want to see an overall credit payment history from all borrowers when they are processing and underwriting mortgage borrowers.

Many mortgage lenders require credit tradelines from its mortgage loan borrowers.

  • Credit tradelines are credit accounts the mortgage borrower has active and reports to all three credit reporting agencies
    • Transunion
    • Experian
    • Equifax
  • In order to be considered a credit tradeline it has to be seasoned and reporting to all three credit bureaus for at least 12 months

Examples Of Traditional Credit Tradelines

All traditional credit tradelines report to all three credit bureaus.

Below are examples of traditional credit tradelines that report to credit reporting agencies:

  • Credit card accounts
  • Automobile loans
  • Student loans
  • Department store credit accounts
  • Revolving credit cards 
  • Any other credit accounts that report on credit bureaus

Depending on the mortgage lender, many require that in order to count as active credit tradelines, the account must have been active and in good standing for at least 12 months.

  • Just opening up three credit card accounts right away will not count as three credit tradelines
  • Again, a twelve month seasoning requirement is mandatory to be considered a credit tradeline by lenders
  • Yet,  there are some mortgage lenders who require a minimum of 24 months in seasoning requirements for it to count as a credit tradeline

Qualifying For Mortgage With Credit Tradelines Not Seasoned 12 Months

FHA, VA, USDA, Fannie Mae, Freddie Mac does not require minimum credit tradelines for a mortgage borrower to get an approve/eligible per Automated Underwriting System Findings. Credit Tradelines are lender overlays where each individual mortgage lender requires. Every lender has different credit tradeline requirements. The Gustan Cho Team at USA Mortgage does not have any credit tradeline requirements. We are direct lenders with no lender overlays and just go off Automated Underwriting System Findings.

The answer to the above question is yes.  Mortgage Borrowers can qualify for mortgages without any credit tradelines. However, if a borrower has no credit scores, some sort of credit tradelines is required. On cases where borrowers have no credit scores, then we can use nontraditional credit which are tradelines that do not report on credit report.

  • The Gustan Cho Team at USA Mortgage welcome mortgage loan applicants with no credit
  • We will accept nontraditional credit in lieu of traditional credit
  • Lenders who accept borrowers with no credit scores will require three nontraditional credit tradelines
  • Many folks who do not have credit tradelines also do not have credit scores
  • Borrowers have no credit scores can still qualify for a residential mortgage loan with at least three nontraditional credit 

What Are Nontraditional Credit Tradelines?

Nontraditional credit tradelines are credit accounts that do not report to the three credit reporting agencies.

  • Cell phone accounts
  • Phone bill accounts
  • Cable television accounts
  • Utility accounts
  • Insurance accounts
  • Rental verification

The above are all examples of nontraditional credit tradelines.

  • Rental verification is probably the strongest and most important nontraditional credit tradelines with the most weight
  • Make sure making monthly rental payment to pay it with a check so it can be documented
  • Verification Of Rent is only valid if it can be proven with 12 months of on time canceled checks and/or 12 months bank statements
  • Renters who are renting from a registered property management company can get a verification of rent form, VOR, provided by the lender and completed and signed/dated by the property manager in lieu of canceled checks/bank statements
  • Cash payment does not count as rental verification even with a paid receipt from the landlord

Home Buyers with no credit scores that need to qualify for a mortgage with a direct lender with no overlays, please contact The Gustan Cho Team at USA Mortgage at 262-716-8151 or email us at gcho@usa-mortgage.com. We are available 7 days a week, evenings, weekends, and holidays.

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.

Comments are closed.