Recently I have been running into an interesting dilemma.  In the last 6 months I have had several very wealthy, very financially responsible individuals encountering extreme difficulty qualify for a home loan due to a lack of credit history.

Many banks will not lend to a borrower who has less than 3 active credit trade-lines.  A trade-line is a mortgage, car loan, student loan, unsecured credit card, personal line of credit, or unsecured personal loan where you make monthly payments.   These payments must be reported by the lender, bank, or credit card department to the credit bureaus.

Contrary to popular belief, our cable bill, cell phone bill, and rental payments do not positively reflect our credit report, nor can they be used as an ‘alternate’ form of credit for loan amounts over $417,000.00

If you are the type of client who has a limited credit history or likes to pay for everything cash, I recommend establishing a few credit trade-lines at least 6 months prior to the day you apply for a loan.   Having some type of stable credit re-payment history is key in getting a loan in today’s market.

As always, if you need information on starting a new loan for the purchase or refinance of your home, contact me at  TrustYourLender@gmail.com