Limited Credit and Mortgages

Summary

Your credit is critical in getting approved for a mortgage.

People who don't have a long track record with credit will have a harder time getting approved.

There are mortgage lenders who specialize in people who do not have a lot of credit. You may still be able to get approved for a mortgage.

Basics

Your credit report reflects:

• how many accounts you have
• how long you have had these accounts

How Many Accounts You Have

Your credit report will list all of your recent credit lines. This includes any mortgages, auto loans, student loans, credit cards, department store cards, and delinquent bills sent for collection.

Mortgage lenders like to see borrowers who have a few different credit lines that they have managed properly over time.

Problems with credit early on are not a good indicator to mortgage lenders. If you have errors on your credit report you should work to clean these up before you apply for a mortgage.

How Long You Have Had These Accounts

The credit report also lists the date each of these credit lines was opened.

Make sure that any new credit lines you have opened are listed on your credit report, especially if you don't have much credit.

This helps you establish credibility with lenders. It is a financial track record that you can show to lenders.

Mortgage Lenders

There are mortgage lenders who specialize in offering borrowers the chance to get a mortgage even though they don't have much credit history.

These types of mortgages usually require a borrower to show proof of employment and put a substantial amount of money as a down payment on a property. This can be a down payment of 20% or more. This may be prohibitive for some borrowers.