New homebuyers often ask: can I get a mortgage with no credit? The short answer is no. However, almost nobody has absolutely no credit. So, even if you don’t have a credit score, mortgage lenders may still lend to you based on other components of your credit history.
What Credit History Lenders Look For
If you’ve never had traditional credit like credit cards, student loans or car loans, it’s likely your credit report won’t produce a credit score. But when approving your mortgage, a lender will also see other items that show up on a credit report, including:
- Inquiries from all creditors so a lender can see if you’ve been applying for other credit, and therefore might have new debt pending.
- Judgments, liens and collections like bankruptcy filings, tax liens or collections like unpaid parking tickets or a medical bill your insurance company didn’t pay.
- Personal information such as current and past addresses, Social Security number and previous employers to indicate income stability.
How Can You See Your Credit Score Before Talking to a Lender?
Despite numerous advertisements for credit reports, AnnualCreditReport.com is the only government-sanctioned site to get your free credit report. Visit AnnualCreditReport.com, and click the red “Request yours now!” text at the top of the screen. You’ll be asked to provide full name, social security number, date of birth and current/previous mailing addresses. AnnualCreditReport.com service doesn’t provide credit scores, but you can view the aforementioned report details.
What If You Don’t Have a Credit Score?
If you don’t have a credit score but the rest of your credit report is clear of collections or other negative items, some loan programs – usually government-backed programs like FHA loans – will consider non-traditional credit like rental payment history or utility bills, like phone or cable, in lieu of credit scores.
You must document at least 12 months of on-time payment history in each case, and a specific lender will advise on exactly what they need. A lender may also require that your housing payment doesn’t exceed 31 percent of your income, and may ask for someone with a credit score to co-sign the loan.
It’s easy to find a reputable lender to talk to about your specific options if you have no credit scores but an otherwise clean credit report.
How to Start Establishing Credit
If you want to buy a home, you need to establish credit scores to get the best rates and terms. To see how much lower or higher scores impact rates, run sample rate quotes using different scores.
If you don’t have a credit card, start by getting one or two cards, use them for a couple charges monthly, and pay them in full monthly. This way you’re not paying any interest, and you’re establishing on-time payment history that results in high credit scores. In time, you’ll be in a position to acquire a home loan and make an offer on your dream home.
Tali Wee is a Marketing Content Specialist at Zillow.com. She writes about personal finances, mortgages, and home improvements for the Zillow Blog and other Zillow partners.
Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.