12/5/2005

Advice from Nashville's leading Financial Aid Advisor Dave Ramsey

 
Dave Says
By Dave Ramsey
Author of:
Financial Peace and
The Total Money Makeover

"Qualify for mortgage with no credit?"


Dear Dave –



I’m 30-years old, single and I want to know how I can build a credit history in order to get a home loan. I’ve never had loans or car payments or anything like that. When I talked to a mortgage broker he said in order to get a loan or be pre-qualified I’d have to pay extra because they’d have to do my credit report manually. 

Nancy in Michigan



Dear Nancy –



You need to get a new mortgage broker, because this guy’s lazy. Most underwriters just pull it off a FICO score, and that’s based on whether or not you have debt and a long credit history. If you don’t have a big, long credit history they actually have to look at the paper with their eyes and examine it for a few minutes. That’s what “manually” means. It’s not like they have to dig a ditch or something.

Here’s the deal. Even if all you’ve ever done is pay your rent on time or early, you have a credit history - and in that case, a good one. You don’t have to run up a bunch of debt to have a credit history! I’ve even heard these people say that you need to have a car payment and several credit cards just to have a credit history and have a shot at a home loan. 

The fact is, if you have several credit cards – even if you have zero balances and you’ve paid everything on time – it counts against you when you try to get a mortgage. Any decent underwriter would realize a person in that situation was an accident looking for a place to happen.

- Dave

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