Posted by Caton Jensen in
When applying for a mortgage loan, your credit score plays a huge role. Thus, many people choose to establish a good credit history before applying for a mortgage. Having a low credit score will not necessarily prevent you from getting a mortgage. Likewise, it’s possible to get a mortgage with no credit history. Before applying for a no FICO score home loan, it is important to understand how these loans work, and how to qualify.
Credit Score Purpose
Credit reports are very important. How would a bank lender be able to assess who they can and can’t trust with a loan if there was know way to estimate how they were going to handle your money. That is why we have credit reports. Trust me, not having credit reports would be worse for everyone. Credit reports have quite a bit of information. They include your history of payment and your credit history–two different things. A history of payments is self explanatory but a credit history is comprised of the number of credit lines you have, the length of time those lines have been open, and the outstanding balance on the accounts.
How Mortgage Loan is Affected By Credit Scores
A long time ago, getting a mortgage loan with poor credit was impossible. But, now lenders and other institutions have started to offer flexible programs that make you able to qualify yourself and your family for the loan. These mortgage loans are designed especially for those families and individuals with poor credit.
Most of the time, poor credit means you have many late payments or judgments. Very bad credit is often due to a bankruptcy or a foreclosure on a home. There are all very important factors to a low credit score which means higher interest rates for you, also increasing the overall mortgage payments. lucky for you, there is a loan program that does not base the approval only on a FICO score, though they still have a part to play.
Home Loans With No Credit?
If you have bad credit or no credit history, you may qualify for a no credit score home loan. In many instances, homebuyers earn a sizeable income, in which they can afford to buy a home. However, because of past credit history, many will not qualify for a conventional home loan. Rather than wait until credit improves, these individuals may apply for loans without using credit scores.
Try using one of ABC Loan Guide’s
Many mortgage lenders offer these sorts of loans. However, homebuyers must meet certain criteria. For example, most lenders will only finance 70% or 80% on a no credit score loan, thus the homebuyer must have a down payment of approximately 20% - 30%. Secondly, most lenders require full documentation on these loans. Thus, homebuyers needing a no doc or stated income loan may not qualify.