Nontraditional credit, a happy ending
I received a call from a young lady who was referred to me by an existing client. She was very excited as she was looking to buy her first house. She had a neighborhood picked out, small down payment set aside and style of house she would like.
Unfortunately, she was turned down for a mortgage by several MLO’s before she even applied since she pays for everything in cash or check so she had no credit established and none of the bills were in her name. The other MOL’s (the ones that actually spoke to her) instructed her to open at least 2 credit card accounts to establish credit. Once the accounts were open she would have to wait a year before the trade lines can be used.
I spoke to her at length to gain an understanding of her exact situation. It turns out she lives with her sister and pays the utilities as well as gives her sister a monthly rent payment. She pays her cell phone bill in cash directly to the store. All the utility bills are in her sister’s name, so the other MLO’s did not consider using them to establish credit.
I explained that we can still use her payment history to establish a nontraditional credit profile as long as it is consistent and there is a 12 month history. She was very skeptical since she was turned down several times before, but her friend said I would be able to help her so she decided to trust me.
I asked her to send me 12 month cancelled checks for all the utility bills she is paying as well as 12 month cancelled rent checks to her sister. I also asked her to go to her cell phone provider to get a 12 month payment history on their letterhead.
Luckily she is very organized and was able to gather everything I asked of her within a few days. Once I had all the requested information in hand, I presented it to the credit bureaus and was able to establish a nontraditional credit profile for her within a few days.
The happy ending is she is in contract to buy the house of her dreams and will be closing on it the end of next week. I love happy endings. If you have a situation you need help with or just looking for a loan officer on your side, please don’t hesitate to contact me.