Build a House Loans
The first thing most lenders look at when you want to buy a home is your credit history. Most people have traditional lines of credit such as credit cards, auto loans or a current mortgage that form a track record of how they manage debt.
But if you have no credit history or what’s sometimes called a nontraditional credit history, which is one with no credit card debt or other kinds of loans, it might be harder to establish a set of credit stats. That could make it tough to find a mortgage lender who will work with you. But don’t give up, it’s not impossible.
Here’s how to get a home loan with no credit:
- Ask your landlord or service provider to report on-time housing and utility payments to one of the three main credit reporting agencies.
- Get a loan backed by the Federal Housing Administration.
- Consider a smaller lender or a credit union.
No credit history? A payment history can help
Even if you have no credit history from a mortgage lender’s point of view, your payment history is out there; it’s just a little harder to locate, making it more difficult for a computer to generate a credit score.
For example, Experian, one of the three major credit-reporting agencies, accepts rental payment history information from third-party processors as proof of credit history, but it’s up to your landlord to opt in to the system, says Rod Griffin, Experian’s director of public education.
Although some larger multifamily apartment complexes are already reporting this information automatically, private landlords of single units or a handful of properties might not realize they can do their tenants this service, Griffin adds. There’s a nominal monthly fee for landlords to collect and report their tenants’ payments online via third-party processors such as PayYourRent, ClearNow and RentTrack.
Don’t forget that student loans get factored into your credit score, Griffin says. Making timely payments for at least six months or more will help build a positive credit score. Utility payments and cell phone bills are also considered, but fewer of those companies are jumping on the reporting bandwagon because of privacy laws in some states.
These type of payments establish a track record that FICO and VantageScore have included in their credit scoring formulas, Griffin says. The idea that you need credit cards or other personal loans to qualify for a home loan simply isn’t true anymore, he says.