Most lenders first look at your credit history when you want to buy a home. Most people hold conventional lines of credit like credit cards or a current mortgage that build a track record of how they manage debt. When you have no credit history, which is also called a non-traditional credit history, it might be difficult to set up a set of credit stats. This will become a difficulty in finding a mortgage lender who will work with you, but don’t worry; it’s possible. Concurrently, you can obtain a fledgling credit score. You could also learn how to develop it and see it as it grows.
Home Buying Options For Low-Credit Scores
While you do not have any official credit history, you do have a history of paying for vital things, such as rent and utilities, that can increase your credibility as a borrower. This can even help your credit score.
There are credit-reporting agencies that accept rental payment history as evidence of credit history, but your landlord has to be involved in the system. Student loan payments will be added to your credit score. Utility payments and mobile bills are also taken into account in some states, but late payments will work against you.
These types of payments create a track record and added credit scoring formulas. On time payments of your rent and utility bills shows responsibility and how well you’re able to pay your bills and how well you might manage other debts. You can also start building your credit this way. It will not cost anything to obtain your fledgling credit score. People who do not have a substantial credit record often use FHA mortgages. FHA loans enable lenders to leverage non-traditional credit histories to qualify borrowers.
Read About : Benefits of Having a Good Credit Score
Although you are qualified for an FHA loan, mortgage lenders will not accept you. Most of the financial institutions do not like to be involved in manually collecting a paper trail mortgage loan and provide you financing. They like to work with people who have a credit history. However, there are many lenders who can work with people who have non-traditional credit histories. Some online lenders and independent mortgage brokers might consider helping you qualify for a loan if you come up with rental or utility payments.
Show an on-time payment history to get qualified for a mortgage without having a credit history. If you’re currently living on a rent basis, ask your landlord and service providers to send your payment history to the credit reporting agencies. Maintain timely payments for a strong credit score to buy a home.
Drew Mortgage Associates is a leading mortgage company that will help you in buying a home. Drew Mortgage Associates offers professional home loan services.
You can find ideal mortgage lenders in Boston MA for both purchasing a home and refinancing your current home loan. Boston mortgage lenders help borrowers through the entire loan process.