I have gotten several clients in the last few weeks who are without a credit score and think they cannot get financed. Furthermore, there is a certain radio talk show host who brags about haven a "zero fico score". I expect to see more of this, so here's how to get financed if you don't have a score.
We collect the information on your alternative creditors such as the water, power, gas, and telephone companies and get them to report your payment history to the credit bureaus.
We also get the information from your landlord and get it to report as well.
When we have 4 sources that will verify that you've paid on time for the last 12 months, we can ususaly get a lender to accept your loans applications.
Now, here's some misconceptions about using alternative credit.
Alternative Creditcannot be used to offset bad credit. So say you have some unpaid bills and they have gone into collection and they show up on your credit report, you cannot use Alternative Credit. At that point, you need to establish some traditional credit and wait for it to establish a credit score for you.
The rate you receive may not be the same as someone who has established traditional credit. It runs as much as .375% higher to use non traditional credit at some lenders.
Your loan will not process as fast without traditional credit scores. You cannot get an automated approval without credit scores. Furthermore, it takes a few days to collect the information and get the credit reports to report your Alternative Credit.
Alternative Credit can be useful for those who are not using the system, but wish to purchase a home. Just be prepared for a little bit more work and possible higher rate. If you want a list of acceptable sources of Alternative Credit, just email me.
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