Solutions For No Credit Scores And Qualifying For Mortgage

This BLOG On Solutions For No Credit Scores And Qualifying For Mortgage Was PUBLISHED On July 1st, 2020

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 And Qualifying For Mortgage.

• This is common for many young folks who just entered the workforce
• It is also common with recent graduates from technical schools, junior colleges, and colleges and universities or those who lived with their family 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 And Qualifying For Mortgage.

Re-establishing Credit 

Some consumers make a practice of always doing consumer transactions using cash:

• Consumers with no credit scores can often get credit scores quick
• This is done by starting 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 a difficult time qualifying for a mortgage loan with no credit scores.

How Can I Get Credit If I Have No Credit Scores?

Consumers may have a hard time 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 profile
• Creditors will review payment history on the credit report
• The longer consumers have an established on-time payment history, the higher credit scores will be
• The higher credit scores, the fewer risk consumers will be and the lower interest rates will be
• Higher credit scores and longer payment history means 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 of a creditor to see what their financial behavior has been in the past

The best way to establish credit when consumers have no credit and no 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 a deposit with the credit card company. The credit card company will issue a consumer credit limit equivalent to the deposit they make 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 credit history consumers will have and the higher credit scores will be
• A late monthly payment on a secured credit card will be reported as a late payment on credit report and credit scores will drop
• This defeats the purpose of having secured credit cards

Make sure to religiously pay monthly minimum secured credit card payments on time.

Adding As 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 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 be hurt the authorized credit card user because the late payment will be reported on the authorized user 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 the three credit reporting agencies
• There are some lenders like myself that can approve mortgage loans with no credit scores
• We can take non-traditional credit tradelines in lieu of traditional credit tradelines
• Non-traditional credit tradelines are creditors that do not report the payment history to the three credit reporting agencies

Examples of nontraditional credit are the following:

• 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 and no traditional credit tradelines, please contact Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com or APPLY NOW.

About The Author Of Solutions For No Credit Scores

This BLOG On Solutions For No Credit Scores was written by Alex Carlucci 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 not having any 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.