Can I get a mortgage without having any credit score?

By
Mortgage and Lending with Bank of Oregon a division of Willamette Valley Bank

 

Can I get a mortgage without having any credit score?

 

The lending environment has really tightened up and having a good credit score is more important than ever when looking to obtain a mortgage.  So, for someone out there who has always paid cash for everything and has not established conventional credit, may be asking themselves "Can I get a mortgage without having any credit or score?"

 

While policies will vary from lender to lender, there are possibilities for folks without reportable credit, or a credit score to still obtain mortgage financing.

 

Bear in mind that if you're looking for a bank to lend you a pretty hefty chuck of change for generally, the biggest investment someone will make, they are going to still want to know that you are a good credit risk. So, let's look at some examples of what a lender will want to document in order to provide a mortgage without having a credit score.

In my experience, I've generally seen lenders that will accept "Alternative" or "Non Traditional" Credit, break down their requirements into "tiers".  While the below examples again, will vary from lender to lender, this is some pretty typical stuff I've seen. Generally, the lender will want a twelve month history for each "alternate" credit source, and a minimum of four alternate creditors.  Generally without exception, at least ONE, needs to be housing related. 

 

 

*Tier One Credit.*

Housing related source.  Again, the lender is going to require one housing related credit source.  They will generally want the credit reporting agency to verify satisfactory rent payments.  They will also want to know "who" verified the rental history.  In other words, did a property management source verify the payment record, or did the individual landlord verify it.  If it was verified through just a landlord, the lender may require copies of cancelled rent checks in addition.

Utilities, providing the utilities aren't included in the monthly rental amount.

Acceptable utilities would generally be gas, power, water, phone and cable services.

 

*Tier Two Credit*

Medical Insurance premiums (excluded are payroll deductions)

Auto Insurance premiums

Life Insurance premiums (excluded are payroll deductions)

Insurance paid for household goods or a renters policy 

 

*Tier Three Credit*

Payments on school tuition

Payments on medical bills

Rent payments for durable goods

Payments to local stores such as appliance stores, specialty shops, etc.

Child care payments

A loan from an individual. This will need to be well documented with a signed agreement and copies of cancelled checks

 

So, if you are looking to buy that first home and are having difficulty securing financing and are being told you can't get a mortgage without having a credit score, seek out a lender that can build credit using these alternate or non traditional means.  

 


 

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Fred Griffin
Get There Social Media, LLC - Tallahassee, FL
Real Estate Technology

Karen, my sister-in-law worked as a mortgage broker in Scottsdale.   She told me about a man who had never used a credit card in his life, paid cash for his automobiles, etc.  She was able to get him qualified for a mortgage loan using the type of criteria you describe above.

 

Jan 28, 2011 05:38 PM #1
Rainer
142,289
Karen Burket
Bank of Oregon a division of Willamette Valley Bank - Medford, OR
Valley Mortgage Grou, Conventional, FHA, VA, mortgages

Thanks, Fred for the feedback!

Yes, while we don't see these situations that often, they are there.  I too, have a client that years ago, was in similar situation.  Boy the paperwork we had to get from them was a little overwhelming, but in the end, they were able to buy a house!

Having that new mortgage started them on their way of establishing a credit profile.  Have done two transactions for them since, using standard documentation.  (Just thinking about them.....SUCH nice folks!!!)  

Jan 28, 2011 06:14 PM #2
Rainmaker
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Brad Rachielles
CENTURY 21 Prestige Properties, Ca BRE# 01489453 - Upland, CA
REALTOR, CDPE, Upland, CA

Karen,

You don't hear about this often.... possibly because of the difficulty/effort involved. I've had a lender that insists that the buyer (hopeful buyer) embark on a credit building program of however many months which includes obtaining a credit card etc. Has never come up with my newer lender so far. Good question to ask him.

Jun 13, 2011 06:42 PM #3
Rainer
142,289
Karen Burket
Bank of Oregon a division of Willamette Valley Bank - Medford, OR
Valley Mortgage Grou, Conventional, FHA, VA, mortgages

Hi Brad!  I would definitely encourage your buyer to seek out a lender who has access to investors that offer "alternative" credit options.  I would never unnecessarily encourage someone to go out and start obtaining credit cards!  YIKES!  I appreciate your visit and comments.  Thank you! 

Jun 13, 2011 06:48 PM #4
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Karen Burket

Valley Mortgage Grou, Conventional, FHA, VA, mortgages
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