Every other person is addicted to using their credit cards. However, there are terrible stories of people who have been crushed under the weight of debt. Many people started reducing or cutting the use of credit cards completely to avoid a miserable debt situation. You would think that they made a smart decision, but they did not.
Having never used a credit card basically leaves you without any credit history. It does not matter how punctual or regular you have been paying your other bills because they are not going to create a credit score for you. The reason is that these other sources of credit history almost never get registered to the three national credit bureaus. Therefore, when you apply for a home loan, the lenders will have no source to access your credit history. As a result, the banks will deny a home mortgage to you.
This dilemma is faced by many people in the USA. People make it out of college and start a job but have no credit history to produce a credit score. The optimum three-digit credit score is a long shot.
Why are Credit History and Score Needed for Mortgage?
Your credit history produces a credit score. This credit score is the information for lenders about how risky it would be to lend you money. A high score means that you are reliable for paying your mortgage payments on time. a low score means a higher risk of not receiving the payments on time.
Lenders will have no idea at all if you have ‘no’ credit history at all.
It is not entirely impossible to build a credit history from scratch if you have never owned a credit card. However, the process is difficult and requires much patience and determination.
How to Get a Mortgage with No Credit History
If you don’t own a credit card, then you have to find a lender that will consider non-traditional forms of credit history. These lenders usually like proof of credit history through rent, utility, and insurance payments. Moreover, you will have to provide them with 12 months worth of canceled checks so that they can build a credit profile for you.
No Availability of Lenders
It is not easy to find a lender that will consider the non-traditional sources of credit history. Therefore, the other way is to gradually build your credit history. This obviously takes time; there is absolutely no shortcut.
The first step is to acquire a basic credit card. Start using it and keep your balance under 30% of available credit. After almost half year, apply for another form of credit say car loan.
If you can’t earn a credit card, then become an authorized user of family member’s card. You can also get yourself a joint credit card account with another family member who has a good credit history.
Building a good score through non-traditional methods can be time-consuming. However, with consistent determination, you can make it./get-mortgage-no-credit-history//wp-content/uploads/2016/07/house.jpg/wp-content/uploads/2016/07/house-177x133.jpgMortgage