On Tuesday I talked about ways to buy a house with bad credit. While it can be difficult, it is certainly something which can be overcome. The only thing harder in the world of credit to overcome is no credit history, at all. Underwriters have nothing to base your creditworthiness on, meaning they have no way to justify stating that you are likely to repay your debt. So while we can explain issues on your credit report when you have bad credit, and we can look for the good on there, when you have no credit history we have nothing at all to go on.

This is a common problem for first time homebuyers, especially those who recently graduated from college. But all hope is not lost. We do have ways of verifying creditworthiness with alternative sources of credit. The most common is cancelled rent checks; if you have 12 to 24 months worth of cancelled checks showing on-time rent payments, we can often use that to begin to build a credit profile. Another common credit source is utility bills (gas, water, phone, cable, electricity, etc.). If we need to, we can also look at insurance payments (car, renter’s, life, medical, etc.), or even school tuition or child care payment for your kids.

The bottom line is that if you have no credit, the mortgage process is not going to be a walk in the park, no matter how much you plan to put down or how much you make per year. But it is also not impossible. You simply need to find a mortgage professional who understands the intricacies of the mortgage world and who understands your specific needs. Then you and that mortgage professional can create an action plan to get you into the house of your dreams.

If you have any questions about buying a house with no credit, or about buying a house in general, please contact me. And if you have anything to add about buying a house with no credit history, please leave a comment.