Nontraditional Credit

By
Real Estate Agent with TIM LORENZ - Elite Home Sales Team DRE# 00919781
https://activerain.com/droplet/mZg

Nontraditional Credit

 

Fannie Mae and Freddie Mac (conventional) and FHA have guidelines determining the minimum number of trade lines and the length of the credit history a borrower should have. Trade lines are the credit history reported by the credit bureaus for revolving and installment debt on a credit report.

Conventional guidelines typically require a minimum of 3 trade lines with a minimum of 1 being open. 1 trade line should have at least a 24 month history and the other 2 should at least a 12 month history.

FHA guidelines typically require a minimum of 3 trade lines and they may be open or closed but each should have at least a 12 month history.

When the above guidelines cannot be met both conventional and FHA allow for nontraditional credit history. The following are the types of credit references that may be used for establishing a nontraditional credit history. The credit references are classified into 2 groups:

Group 1

1)    Rental housing payments verified with the most recent 12 months of cancelled checks

2)    Utility companies including gas, electricity, water, land line telephone service and cable television

Group 2

1)    Insurance payments for medical or auto

2)    Payments to child care providers

3)    Cell phone service

4)    Internet service

5)    Health club memberships

6)    Furniture rental or purchase payments

Group 1 is considered more indicative of an applicant's future housing payment performance. Qualifying ratios are typically lower for borrowers basing their credit on nontraditional credit.

Fannie Mae and Freddie Mac (conventional) and FHA have guidelines determining the minimum number of trade lines and the length of the credit history a borrower should have. Trade lines are the credit history reported by the credit bureaus for revolving and installment debt on a credit report.

Conventional guidelines typically require a minimum of 3 trade lines with a minimum of 1 being open. 1 trade line should have at least a 24 month history and the other 2 should at least a 12 month history.

FHA guidelines typically require a minimum of 3 trade lines and they may be open or closed but each should have at least a 12 month history.

When the above guidelines cannot be met both conventional and FHA allow for nontraditional credit history. The following are the types of credit references that may be used for establishing a nontraditional credit history. The credit references are classified into 2 groups:

 

Group 1

 

 

1)    Rental housing payments verified with the most recent 12 months of cancelled checks

2)    Utility companies including gas, electricity, water, land line telephone service and cable television

 

Group 2

 

1)    Insurance payments for medical or auto

2)    Payments to child care providers

3)    Cell phone service

4)    Internet service

5)    Health club memberships

6)    Furniture rental or purchase payments

Group 1 is considered more indicative of an applicant's future housing payment performance. Qualifying ratios are typically lower for borrowers basing their credit on nontraditional credit.

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Rainer
246,375
Daniel H. Fisher
www.FisherHermanRealty.com (704) 617-3544 - Charlotte, NC
MCRP - Charlotte Real Estate, NC or SC

This is a great list of types of credit references that may be used for establishing a nontraditional credit history.

Jul 24, 2011 10:34 AM #1
Rainer
90,659
Maya Swamy
Funds Available - Long Beach, CA
Ph.D. Long Beach, CA - fundsavailable.com

A very comprehensive detailing of credit lines. I have suggested and bookmarked it for future reference.

Jul 24, 2011 12:56 PM #3
Rainmaker
855,163
Elite Home Sales Team
Elite Home Sales Team OC - Corona del Mar, CA
A Tenacious and Skilled Real Estate Team

Tim

Yes this is the list that the mortgage companies and banks must use for non traditional qualifying.

Jul 24, 2011 06:24 PM #4
Rainmaker
1,023,809
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Daniel

Thank you for commenting on my blog.

Jul 24, 2011 06:50 PM #5
Rainmaker
1,023,809
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Maya

Thank you for taking the time to bookmark the blog.

Jul 24, 2011 06:51 PM #6
Rainmaker
1,023,809
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Mark

Good to see you are still up and blogging.

Jul 24, 2011 06:51 PM #7
Rainmaker
1,173,247
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

This is very interesting, Tim.  A great way for people to see if they indeed can qualify if they dont have traditional credit sources.  I am bookmarking.

Jul 30, 2011 07:46 AM #8
Rainmaker
1,023,809
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Thank you for dropping in and finding value.

Jul 30, 2011 10:14 AM #9
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Rainmaker
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Tim Lorenz

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