What If I Have No Credit?

Real Estate Agent with CENTURY 21 WESTERN REALTY

On occasion, borrowers will not have enough credit references to obtain the loan they wish to secure. If this is the case for you, start by opening small lines of credit that report to all three major CRAs, and make purchases that can be paid off easily. If you do not already have a checking or savings account, open one. Your bank or credit union may be able to provide you with a credit card account once you have established a history with them as a customer. If you do not have established credit, you are not completely out of luck. Some lenders will pull a report that will show them whether or not consumers pay their rent and utility bills on time. If they like what they see, they may approve you for credit. That is why it is extremely important to pay these day-to-day living expenses on time. In addition, your ability to hold a steady job will improve the likelihood of being approved for credit.  It is also wise to start saving money for the down payment on your home. The lender will look at your application more favorably when you are able to come to the table with a 20% down payment. Bear in mind, there are certain loan programs available that permit a percentage of gift money for down payment.

Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

William - Professionally, I would rather work with someone with less than perfect credit than someone with no credit.  These days, trying to get credit with no credit history is extremely difficult.  It is true that prospective borrowers should start with their own bank or credit union since they would already have a history with them.

Feb 21, 2011 04:09 PM
Fred Cope
Reliant Realty in Nashville, TN - Nashville, TN
Looking For Homes With A Smile

William, this WHY REALTORS® should never poh-poh an FHA loan.  While it is more difficult to find lenders who truly hold to FHA Guidelines than in days gone by. it is important to ask those questions of every loan officer.  Ask them, "Does your Investor do "traditional underwriting" of FHA loans?"

Most lenders are currently fixated on credit scores; but FHA Guidelines permit alternative credit documentation.  It would be interesting to see how many Loan Officers on AR have anything to contribute to your query.

Feb 21, 2011 04:15 PM
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

William - These days, it doesn't really matter that FHA says they will insure a particular borrower, the question is whether or not an FHA approved lender will fund the loan.  FHA does not fund loans.  Just because FHA says they insure a particular loan doesn't mean any lender has to fund that loan.  FHA approved lenders are allowed to to add their own investor overlays.

While there may still be some lenders that will allow certain types of alternative credit, many lender will not accept alternative credit any longer.

Feb 21, 2011 05:46 PM
Ginger Harper
Coldwell Banker Sea Coast Advantage~ Ginger Harper Real Estate Team - Southport, NC
Your Southport~Oak Island Agent~Brunswick County!

WE have to lead them and guide them to the right answers to the questions.  We can help.

Feb 22, 2011 12:50 PM