Establishing New Credit: Mortgage Approval
Are you trying to qualify for an Arizona Mortgage but and you have been told you do not have
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enough credit? This is something that haunts many home buyers and more specifically first time homebuyers as they sometimes have not established a lengthy credit history. The good news is that there are solutions and strategies that an Arizona mortgage applicant can implement to help establish credit quickly.
Before we jump into the specifics of establishing credit, we need to first know what an opens in a new windowArizona mortgage lender is looking for. The biggest challenge when it comes to having “no credit” is specifically not having a credit score. Each borrower must generate at least one credit score in order to be eligible for any type of Arizona Mortgage (FHA, VA, Conventional , USDA or JUMBO) . Often, as long as a home loan applicant populates at least one score they can then utilize what is known as alternative credit to document credit depth. This page is dedicated to teaching you how to generate a score. See our “ opens in a new windowALTERNATIVE CREDIT PAGE” for more info on fortifying a thin credit profile.
Establishing A Credit Score
Chances are that if a borrower has a payment history with creditor that has reported to one of the 3 main credit bureaus (Experian, Equifax and TransUnion) within the past few months they will typically have enough data associated with their name and social security number to generate a credit score. The vicious cycle that thin credit borrowers face however is not being able to get approved for credit (basic credit card, car loan etc…) due to the very lack of credit they are trying to overcome. Fear not – where there is a will there is a way!
1. Obtain an Unsecured Credit Card Catering To “No Credit Individuals”
There are a handful of companies out there that are in the business of granting credit to people who have no credit. Yes you guessed it, their terms (interest rate, fees, initial credit limit etc…) are not the best. However, if you have no credit and need credit you have to start somewhere. One company that our clients have used in the past is FIRST PREMIER BANK. The HOUSE Team or PrimeLending is not endorsing and does not endorse this company. We have NO affiliation with FIRST PREMIER BANK. We only mention this to give you an idea of what to do if you need to establish an unsecure credit card to generate a credit score.
2. Apply For A Secure Credit Card
While not as impactful in terms of generating a credit score as an unsecured card, a secured card can still help a borrower generate a credit score. Secured credit cards are typically established when a borrower gives a creditor a lump sum of money to be held in a secured account in the borrower’s name. Then, the borrower is typically issued a credit card that they can use to make purchases. When a balance is created on the secured credit card it is then paid automatically using the funds that the borrower has set aside in their secure account with the creditor.
3. Become An Authorized User
Having someone you know add you as an authorized user on an existing/well performing credit card can help you naturally inherit the credit history associated with that account which may also result in generating a credit score.
Each of the options above may help a borrower without credit scores populate a credit score however they will not necessarily help generate the “credit depth” needed for many of today’s existing Arizona Mortgage Products. Check out our opens in a new windowALTERNATIVE CREDIT PAGE to learn more about how alternative credit can help fortify a thin credit profile and help with obtaining Arizona Mortgage Approval.
opens in a new windowThe HOUSE Team is here to help you understand your credit and can assist you with developing a more in-depth credit history. Please call or email us today: Team Phone Number: 602.435.2149 Team Email: Team@JeremyHouse.comcreate new email.
By Jeremy House
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opens in a new windowEstablishing New Credit Arizona Mortgage Approval