Can a person with no credit score get a mortgage?

Individuals with no credit score at all do exist. In fact, many people currently do not have credit. This may be beneficial or detrimental to the individual without a credit score. Either having no or bad credit are both situations that have similar disadvantages. 

People who do not have credit scores are usually young and just gaining financial independence, though some people have chosen to live a “cash only” lifestyle and have never financed a car, a home or even used a credit card.

These people may think that buying a home or any other property may be difficult without having a reference for credit score. However, many people who fall into the aforementioned bracket can get a home through an FHA loan. FHA, the biggest single loan insurer worldwide, garners more leniency with banks and other lending institutions as it is backed by HUD. The lender requires less strict qualifications for a person who wishes to acquire a home through an FHA loan. An FHA loan does not require an individual’s score before allowing a mortgage. It permits the individual to show other lines of credit. 

In an FHA loan, the assigned underwriter will need three lines of credit, which may come from the following:

• History of day care payment for the past year
• Payment history from a utility company for the last twelve months
• A recommendation from a provider of car insurance
• Payments for life insurance

Many families have no scores, but were able to take advantage of a mortgage. An FHA loan offers low down payment rates, easy credit qualification, and many other benefits without the need for a score.

There are other things you can do to ensure that you can get a mortgage even without a credit score. The best thing you can do is to save a large amount of money so a lender will be more willing to work with you. Instant equity results from a big down payment, which greatly lowers the risk to the lender, but gives the borrower better rates of interest.

You can also apply for a credit card and pay regularly and on time to slowly build a good credit history. You can also get recommendation letters from your landlords, both former and current. If you’ve upheld the terms for a minimum of two years, the letter is comparable to a credit card or car loan.