Some borrowers have limited or no credit listed on their credit report. This can effect the ability of a borrower to have a credit score and a borrowers ability to obtain financing for a mortgage. Some lenders offer programs for these borrowers with limited or no credit. These lenders will allow the usage of a letter from rental companies, utility providers, cell phone providers, and many other types of debt to demonstrate a good payment history. Consult a mortgage professional for more information.
If you have limited or no credit, seek alternative tradelines or an FHA loan.
Another solution may be to get a co-signer, like an immediate family member that has good credit history and who would sign on the loan along with you. Of course, they should understand that they take the responsibility for paying if you don’t meet your obligation with the account.
You may also try applying for department store or gas cards, which are typically easy to get, and help build your credit as long as you make the payments on time. That being said, only apply and use credit if you know you can easily repay the debt incurred.
Another easy way to build up credit is to get a small loan from your local bank. Invest that money in safe investment vehicles like Certificates of Deposit. Use the return of your investments to help pay back that loan. Not only will you start building up your credit, but you will become more financially savvy as start analyzing your different investment accounts.
When you have limited or no credit one of the easiest ways to establish credit is to have a family member add you onto a credit card so that you can start to gain a credit history based on their good credit. Make sure that the credit card provider reports an authorized user to the credit company before doing this.
Another way to gain credit is through a secured credit card. This is a credit card that is issued to you based on a deposit you put down.
No credit is not necessarily bad credit. Programs like FHA will allow numerous sources of alternative credit to be used. If you have no credit make sure to keep your electric bill, phone bill and other utility bills organized. You mortgage broker may be able to use these accounts as alternative trade lines.