So you’ve tried to get a loan, only to be turned down because of bad or no credit. No problem – we’ll show you how to get a house loan with no credit in just a few simple steps!
You can get a house loan with no credit by creating a repayment plan, establishing your credibility, putting money into your savings to pay back small loans, coming up with collateral and security, and ensuring you have a good credit score to show lenders you’re serious about repayment.
Now, getting a house loan with no credit isn’t an easy process, and it certainly won’t work for everyone, but it’s certainly worth a try if you find yourself in a position where you can’t get any loan, including house loans because your credit is lacking.
How To Get A House Loan Without Credit
So you’ve tried to get a loan in the past, only to be turned down because of bad credit. No problem – we’ll show you how to get a house loan with no credit in just a few simple steps!
The first thing you’ll want to do is come up with a plan for how you will pay back this loan. You won’t be able to get house loans if you don’t have any repayment plan in place, so you must think this through before moving forward.
The second thing you will want to do is establish your credibility. If you can show lenders that you’re serious about repaying their money, you will have much better luck getting a loan.
It would be best to put your money into savings accounts and pay off small debts so lenders can see how serious you are about saving money and repaying what you owe.
The third thing you’ll want to do is develop some collateral. If you’ve got assets that can be used as security for your loan – such as property or valuable possessions – then this will certainly help your cause.
The fourth thing you’ll want to do is develop some additional security for your loan. You’re not just going to get a loan because you’re nice and ask for it – a lender, naturally, wants to be confident that they will receive their money back if they give you a loan, so you must take steps to ensure that this is the case.
You should consider adding a co-signer to your loan or putting up other property as security for your loan if necessary.
The fifth thing you’ll want to do is to ensure that you have good credit reports and scores before applying for a loan.
This is because lenders will check your credit report when they look at your application, so it’s important that you make sure that everything looks okay before trying to go through with the process of getting a house loan with no credit.
How To Get A Mortgage With Non-traditional Credit
Non-traditional credit data refers to your history of making regular payments for items such as rent, utilities, and insurance. This type of credit includes:
- FHA loans that the Federal Housing Administration backs. They are available to first-time and repeat home buyers. Rejecting a loan application cannot be based on the borrower lacking a credit history or their decision not to use credit. A credit score of 580 is generally the minimum required.
- USDA loans, backed by the U.S. Department of Agriculture for rural home buyers.
- VA loans are backed by the United States Department of Veterans Affairs for active and veteran military members and some surviving spouses. They don’t normally have a minimum required credit score.
Every loan program and lender has its requirements. To qualify for non-traditional credit, you generally need to have made one year of on-time payments for at least two or three recurring bills, such as housing, utilities, and insurance.
You will need to give the lender documentation of your payment history, such as canceled checks, money order receipts, and account statements.
Not all lenders consider non-traditional credit, so you will have to look around. Consider local banks, credit unions, and specialized mortgage lenders
Usually, to be deemed trustworthy by lenders, you normally need to have:
- Steady employment
- Steady income documented by personal tax returns
- Proof that you are saving up for the down payment and closing costs.
- Money set aside in a savings account to be used only in case of an emergency.
- Bank statements that demonstrate your financial assets.
How To Improve Your Credit Score If You Have No Credit
Your credit score is essential because it affects your ability to get a loan and the interest rate you pay. The higher a credit score, the better it will be and the less likely you are to be denied credit, and the lower the interest rates you will receive when applying for loans or other types of credit.
If you have no credit history or an insufficient one, there are some steps that you can take in order to improve your chances of getting approved for a loan. Here are some tips on how to improve your credit score if you have no credit:
Open a new bank account. If you don’t already have one, open an account at a local bank or credit union and deposit around $100 in it. Ensure that there is enough money in the account so the bank won’t be closing it due to a lack of funds.
Pay off any small debts that you may have, such as outstanding parking tickets or medical bills, but do not pay off any large debts, such as car loans or credit cards.
Get a secured loan. This is also known as a “bad” or “low” credit loan because it will have an interest rate higher than other types of loans, and the lender may check your credit report before approving you for this type of loan.
Pay off any outstanding debt in three months. Once you’ve done this, keep paying your bills on time so they can’t be reported as late payments.
Make additional payments on your secured loan if possible. This will show lenders that you are serious about paying back debts and may increase their confidence in lending to you. If you don’t have enough money to make additional payments, try saving up the next time you need to make a payment on your loan.
Try borrowing small amounts of money from family or friends who can be counted on to pay back their loans. These tips should help improve your credit score.
Conclusion
As you can see, there are ways to get a house loan even if you don’t have any credit! Hopefully, this article helped you with what to do if you have no idea how to get a house loan.