Bad Credit

I’m a personal finance expert and here’s how to get a mortgage with no credit score

YOU might be surprised to learn that you can actually take out a loan without a credit score.

Four main factors can determine your credit score.

1

The personal finance expert breaks down a scoreless loan

These include your debt history, the length of your debts, outstanding debt, and any debt incurred in the last 12-18 months.

However, some have not established or have no credit.

The reason you may not have one is that you have never incurred any debt or there is a lack of information in your credit history.

Fortunately, there is a way to get a loan, including a mortgage, according to personal finance guru George Kamel, who is part of Ramsey Solutions.

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He explained how you can do it during an appearance with Fox 32.

How to get a mortgage without credit

Mr Kamal revealed that he actually took out a loan himself with no credit in 2019.

He did this through a process known as manual underwriting, also known as no-score lending.

Through this process, lenders look at your entire financial picture instead of just looking at your ability to repay your debts.

This includes your W-2 forms, your payment history, your utility bills, according to Mr. Kamal.

“They give you a mortgage based on all of that,” he said.

“You can get a good rate as long as you have a good down payment.”

What you need to know about your credit score

Mr. Kamal also gave insight into how you should review your credit score.

While high credit scores can help you get better rates and save money, it doesn’t mean you’re in good financial shape, he noted.

For example, credit scores reveal how well you manage debt – not necessarily money.

“If I give you $1 million today, it won’t improve your credit score,” Kamal said.

Large increases do not improve your rating either.

The downside of having a low credit score

Now keep in mind that a low score can still affect you.

“Let’s be clear, no credit rating is not the same as bad credit,” Mr Kamal told The Sun.

“If your FICO score falls below 670, or your Vantage Score number is below 600, you have work to do to clean up your debt mess.”

In fact, I can understand that.

In 2016, I was looking to rent my first car.

While I had my eyes set on a Kia Optima – the dealership increased the monthly cost by about $60 because I had no established credit and had no major bills to pay, while my father’s credit was not good at the time.

So, I went out and opted for a base model 2016 Honda Accord, but the deal wasn’t much better.

I ended up depositing $3,000 just to bring my payment down to around $265 per month on a car with a Manufacturer’s Suggested Retail Price (MSRP) over $22,000.

It wasn’t much, but it’s important to keep in mind when taking out loans in the future.

There is also a way to fix bad credit scores.

Six months after paying off your debt, “your credit score becomes indeterminable,” Kamal said.

In other words, you become invisible to the credit bureaus, he added.

For more on managing your finances, see what will happen to your credit card if the Fed raises rates.

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