Can I Qualify to Buy A Home With No Credit Scores?

Technically speaking you can possibly buy a house with no credit scores, but you will have to have some credit accounts to ensure that you have sound and satisfactory bill paying habits.

FHA home loan requirements for credit scores and credit allow for the situation that you do not have a credit score or even a credit report established, but that you do have credit references. So if you are planning on buying a home someday, then you should get yourself in a position to be able to prove your credit history as well as provide credit references.

According to FHA there are certain credit references or credit accounts that are better (and required) at demonstrating your future housing payment performance than other credit accounts. There is a specific process for submitting your credit references which includes in most cases working through a credit bureau/agency to verify your accounts. You will provide the information about your accounts to the credit bureau and then they will verify your history and prepare a “non-traditional credit report” per FHA specifications. If you have to go this route, work closely with your loan officer.

In the case of getting yourself ready to qualify for a mortgage you should have at least 6 months of strong credit history with no late payments. Some requirements for some credit references are 12 months and most underwriters are going to want to see 12 months of history so plan on 12 months of no late payments on accounts you can prove.

List of Credit References FHA Considers Strongest

  • Rent payments – best way to prove your history here is 12 months of canceled checks. Alternatively, the credit bureau will independently verify (as well as maybe your lender) with your landlord/property management company your payment history. It is imperative that you do not miss a rent payment or be late on a payment.
  • Utility Company Accounts – if you pay your utility bills separately from your rent payment then your payment history to your gas company, electric company, water company/municipality, land-line home telephone company, and cable TV you can count these as credit references. Again, don’t miss or be late on payments to these accounts if you want to qualify for a mortgage with no credit scores.

Additional Credit References That May Be Used

  • Independently paid insurance premiums for medical, auto, life, renter’s insurance etc.
  • Payment to child care providers – made out to a business
  • school tuition
  • retail stores – department, furniture, appliance stores, specialty stores
  • rent to own stores – furniture and/or appliances
  • Internet and cell phone services
  • Documented 12 month history of saving by regular deposits resulting in an increasing balance (complete bank statements will be required to qualify and the kiss of death on bank statements are NSF checks – non sufficient funds as well as over drafting).
  • automobile leases (payments made)
  • A personal loan from an individual with repayment terms in writing and supported by canceled checks to document the payments (no cash receipts here)

The bottom line for buying a home with no credit scores is that you must be able to prove that you are making credit payments and that you are a good credit risk for future payments.

If you have to qualify this way, make sure you don’t go too far into debt because there are no exceptions to the debt to income ratio underwriting requirements.