This guide covers solutions for no credit scores on mortgage loan approvals. There are cases where consumers do not have any credit scores because they never applied for credit and have no credit. There are solutions for no credit scores qualifying for a mortgage. This is common for many young folks who have just entered the workforce.
If you have a trusted family member or friend with a good credit history, ask them to add you as an authorized user on their credit card account. Their positive payment history can reflect on your credit report, potentially boosting your score.
It is also common with recent graduates from technical schools, junior colleges, and colleges and universities or those who lived with their families and had no credit under their names. Others never applied for credit and do not believe in credit. In this article, we will discuss and cover solutions for no credit scores on mortgage loan approvals.
Solutions For No Credit Scores: Check Your Credit Report
Obtain copies of your credit reports from all three major credit bureaus (Experian, Equifax, and TransUnion) for free at AnnualCreditReport.com. Review the reports for errors, inaccuracies, or fraudulent accounts and dispute any discrepancies. The most significant factor affecting your credit score is your payment history. Pay all bills, including credit cards, loans, and utilities, on time. Set up automatic payments or reminders to avoid late payments.
Reduce Credit Card Balances
High credit card balances relative to your credit limits (credit utilization) can negatively impact your credit score. Aim to keep your credit utilization below 30%. Pay down credit card balances aggressively to improve your utilization ratio. Each credit inquiry for a new credit account can temporarily lower your credit score. Limit new credit applications while you work on improving your credit.
Consider a Secured Credit Card Solutions For No Credit Scores
If you have trouble getting approved for traditional credit cards, consider applying for a secured credit card. Secured cards require a deposit as collateral but can help you establish or rebuild credit. Negotiate with creditors or collection agencies to settle or pay off outstanding debts. Once paid, request a letter of deletion or pay-for-delete agreement to have the negative information removed from your credit report.
Solutions For No Credit Scores To Diversify Your Credit Mix
Having a mix of credit types, such as credit cards, installment loans (e.g., personal loans or auto loans), and retail accounts, can positively impact your credit score. If feasible, consider adding a different type of credit account to your portfolio. The length of your credit history is another factor that affects your credit score. Keep your oldest credit accounts open to demonstrate a longer credit history.
Use Credit Monitoring Services
Subscribe to a credit monitoring service to keep track of your progress and receive alerts about any changes in your credit report. Remember that rebuilding credit takes time, and there are no overnight solutions. It’s essential to be patient and stay committed to good financial habits. Consult with a financial advisor or credit counselor for personalized guidance on your specific situation. Additionally, it’s advisable to consult with mortgage professionals to determine the credit score requirements for the mortgage you’re seeking and work towards meeting those requirements.
Re-Establishing Solutions For No Credit Scores
Rebuilding your credit quickly to qualify for a mortgage is possible, but it requires consistent effort and discipline. Here are some of the fastest solutions to improve your credit score. Some consumers practice always doing consumer transactions using cash: Consumers with no credit scores can often get credit scores quickly. This is done by establishing credit tradelines by adding credit. Having no credit scores is like having bad credit. It will hurt consumers in getting new credit. Homebuyers will have difficulty qualifying for a mortgage loan with no credit scores.
How Can I Get Credit If I Have No Credit Scores?
Consumers may have difficulty getting new credit if they have no credit and no credit scores. Whether it is a credit card company, automobile dealer, or mortgage company, they all will pull credit and review credit history and credit scores. One way interest rates are determined is by reviewing consumer credit profiles. Creditors will review payment history on the credit report.
The longer consumers have an established on-time payment history, the higher their credit scores will be. The higher credit scores, the less risk consumers will be, and the lower interest rates will be
Credit scores and longer payment history mean lower credit risk for the credit applicant. With lower risk comes lower interest rates. Credit applicants with no credit scores are like credit applicants with poor credit. This is because there is no way for a creditor to see what their financial behavior has been in the past. The best way to establish credit when consumers have no credit or credit scores is by getting several secured credit cards.
Secured Credit Cards To Establish Credit
Secured credit cards are credit cards that require consumers to put in a deposit with the credit card company. The credit card company will issue a consumer credit limit equivalent to their deposit with the secured credit card company. Secured credit card companies will charge an annual fee, just like any credit card company. Credit card companies will charge interest on the credit card balance. It is just like any unsecured credit card company. The biggest advantage of secured credit cards is that they will report payment history to all three credit reporting agencies.
Road Map To Great Credit And High Credit Scores
With timely payment every month and longevity of timely payment history, consumers are establishing credit. On-time payment history and low credit card balances will yield credit scores. The longer the payment history, the stronger the credit history consumers will have and the higher their credit scores will be. A late monthly payment on a secured credit card will be reported as a late payment on a credit report, and credit scores will drop. This defeats the purpose of having secured credit cards. Make sure to pay monthly minimum secured credit card payments on time religiously.
Adding An Authorized User To Raise Credit Scores
Borrowers can establish credit by adding themselves as an authorized user on a family member’s credit card. There are risks associated with this strategy. If the main credit card user has their credit cards maxed out, this will hurt credit scores because having a credit limit full will drop the debtor’s credit scores. More importantly, if the main credit card holder is ever late on their minimum monthly payments, it will hurt the authorized credit card user because the late payment will be reported on the authorized user’s credit report as well.
Can I Qualify For Home Loan With No Credit Scores
Most lenders require three credit tradelines from mortgage loan applicants. Credit tradelines are not agency mortgage guidelines, but rather, they are lender overlays. A credit tradeline is a credit account that has been seasoned for at least 12 months and has been reporting to three credit reporting agencies. Some lenders like myself can approve mortgage loans with no credit scores.
- verification of rent
- insurance payments
- cellular phone payments
- utility payments are all examples of non-traditional credit tradelines
If you are a home buyer with no credit scores or traditional credit tradelines, please get in touch with Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com or APPLY NOW.
Fastest Solutions For No Credit Scores on Mortgage Approval
We can take non-traditional credit tradelines in place of traditional credit tradelines. Non-traditional credit tradelines are creditors that do not report the payment history to the three credit reporting agencies. Homebuyers with no traditional credit tradelines can add non-traditional credit tradelines on the three credit bureaus:
Examples of nontraditional credit are utility bills, cellular phone bills, insurance payments, rental payments, and any other monthly payments that do not report to the three credit reporting agencies.
Alex Carlucci wrote this BLOG On Solutions For No Credit Scores of Gustan Cho Associates. Alexander Thomas Carlucci is an associate contributing editor for Gustan Cho Associates Mortgage News. Alex Carlucci is also a senior mortgage banker at Gustan Cho Associates. Alex Carlucci has a national five-star reputation as a direct lender due to no overlays on government and conventional loans. Alex has worked with Gustan Cho for almost a decade and is one of Gustan Cho Associates’ top national loan officers.
