How do you qualify for a USDA loan with little or no credit history?
Can you qualify for a USDA loan with little or no credit history?
How do you qualify for a USDA loan with little or no credit history?
In a situation where there has been little credit established or no credit history reporting at all, can it still be possible to qualify for a USDA loan?
In today’s video I will discuss what options are available for these situations and further explain how it can be possible to qualify for a USDA loan with either limited or no history reporting to the credit bureaus.
And, if you have not yet done so, don’t forget to download our newest educational flyer with the link below. This free guide will show you how it can be possible to increase a qualifying credit score in less than a week!
How do you qualify for a USDA loan with little or no credit history?
First off, what does non-traditional credit really mean? A traditional credit reference example may be an:
- Auto loan,
- Credit card, or
- Another type of account that is reporting to the credit bureaus
But, when a potential homebuyer does not have this traditional type of established credit reporting, we still have options are are able to utilize non-traditional credit accounts, also known as alternative credit, to help establish their ability to qualify and repay the loan with examples being:
- Electric Bill,
- Water,
- Phone, or
- Rental payments through either a management company or cancelled checks
Overall, USDA guidelines require that there be at least two eligible tradelines (accounts) on the credit report with at least 12 months of repayment history to be reviewed as part of their minimum credit reputation requirement.
However, for those buyers who have limited or no credit history reporting at all, USDA guidelines state the following when using non-traditional credit to qualify:
- Two trade references are required when at least one of the trade references includes verification of rental housing payments or mortgage loan payments.
- If unavailable, at least three trade references must be used to determine if an applicant has a sufficient credit history.
Once we are able to determine which eligible recent accounts are to be verified, payment histories will be reviewed in order to determine their eligibility towards USDA qualifying.
In summary, remember that it can be possible to qualify for a USDA loan with little or no credit history, but minimum credit conditions will apply, and the use of non-traditional credit may not be a substitute for negative credit.
We understand that qualifying for a USDA Loan may seem difficult and overwhelming, but… when you work with a lender that can maximize the potential of this unique program, it is a match that can help open the door to homeownership.
So, keep us in mind for your next pre-qualification or if you have a current USDA loan in progress and need an expert 2nd opinion.
Just call or email to discuss your scenario and let us show you the “Metroplex” difference!
Email: SeanS@MPLX.org
Toll Free: (800)806-9836 Ext. 280
Let’s make it a great day and I look forward to seeing you right here for the next tip of the week!
Here is the educational flyer to download in order to learn how it can be possible to increase a credit score in less than a week!
