Unbelievable right? But there’s a way.
Everyone is looking for access to new housing opportunities. It would be fantastic to own a home. But it is necessary to do so at the right price and in the right way.
If you are in the market for a new home, you quite likely know that you must try to maximize a fantastic credit score. You understand that a great credit score can help you seize a good home. Furthermore, you can get it at good interest rates.
You will want to take advantage of current low-interest rates and fantastic real estate opportunities. At the same time, you may find that you have no credit history. What should you do?
While it is a more involved process, you can still buy a home with no credit history.
Minimal Credit or Zero Credit?
Do you have zero credit or minimal credit history? It is an important question to ask as you go about the home purchase journey.
This is a foundational concept. First, remember that a credit score is a three-digit figure that lets lenders know your creditworthiness. The higher the score, the better borrower you are. The higher the score, the lower the risk will be to lenders.
You are quite likely aware of the FICO score and now you know that it is a common credit score.
But just because you haven’t applied for credit doesn’t mean that you have a zero score. This means you do not have a score at all.
If you have no credit in your name, then no one knows your level of risk. Lenders can establish a score only after you have taken out a line of credit for six months.
They can then establish a score based on your borrowing activity and payments as well. Most individuals will start at a moderate range, around 580 before it starts to shoot up.
Thankfully, you can quickly check your score in various ways with your lending providers and banks.
Remember that a very low credit score shows that you are not a great borrower. But a lack of a credit score shows that there is no information.
Obtain a Mortgage with No Credit Score
How can you show that you are a great borrower?
The primary way is for your application to go through manual underwriting. A person will look at your finances and overall situation. They will either accept the application or deny the application.
You can improve your odds by having a good and stable income, minimal or no debt, and having enough funds to place a 20% down payment.
Of course, you will also need to show that you are up to date on all of your bills and overall expenses. You will need to show that you pay your utilities, rent, car insurance, and other bills on time.
This is how you win and obtain a mortgage with no credit history.