Having no credit is more common than you may realize. Having no credit cards, loans, or other forms of personal debt may mean that you have no credit history. While this may not seem like a bad thing, it can make buying home far more challenging. Your credit score is something that lenders consider when deciding to lend to you, and if you don't have one, you may not be able to get financing. But, there are still ways to buy a home, even if you don't have a credit score. Here are three things to know about no credit financing.
A Conventional Loan May Not Work
When it comes to home loans, many homebuyers go with a conventional mortgage. But, if you have no credit, conventional lenders may not lend to you. Typically with a conventional loan, a credit score of at least 620 or 640 is required. If you have no credit score, this poses a challenge. The solution is to forgo a conventional loan and look into other types of loans. People with no credit may have better luck with FHA loans or different kinds of loans.
A Co-Signer Can Help
Another way to get no credit financing is by using a co-signer. While a co-signer won't work for every situation, if you are otherwise qualified to own a home, a co-signer with good credit can help make up for your lack of credit. A co-signer is typically a family member, but may also be someone you have a longstanding and close relationship to. If you have someone willing to act as a co-signer, your lender may be more willing to work with you.
Look At Different Lenders
When it comes to mortgage lenders, you will find that very often they have different criteria that need to be met before they will lend to you. If you have no credit history, shopping around is beneficial because you will likely find that while one lender will not work with you, another one will. Local banks and credit unions are great places to start and are more likely to work with unconventional borrowers. Emphasizing the positive, like an impressive down payment or bill payment history, can also help when searching for a lender.
If you are looking to buy a home but have no credit history, it is possible to find no credit financing. First, a conventional loan may not work for your needs. Looking into different types of loans and loan programs is a strategy that may work. Using a co-signer on your mortgage may also give you the push needed for approval. Finally, shop around, while one lender may not be willing to provide you with a loan, another may be willing to take a chance on you.
For more information on no credit financing, reach out to a local mortgage lender.