If you plan to apply for a mortgage loan, you should be expecting to have a great credit score. This will help you significantly. However, some people who didn’t think to build up their credit prior to applying for a loan, may be up the creek without a paddle. However, it doesn’t mean you can’t get the loan. There is such thing as a no-FICO home loan but before you go applying for this, there are some thing that you’ll need to understand.

Purpose of You Credit Score

Credit reports are very important. How would a bank lender be able to assess who they can and can’t trust with a loan if there was know way to estimate how they were going to handle your money. That is why we have credit reports. Trust me, not having credit reports would be worse for everyone. Credit reports have quite a bit of information. They include your history of payment and your credit history–two different things. A history of payments is self explanatory but a credit history is comprised of the number of credit lines you have, the length of time those lines have been open, and the outstanding balance on the accounts.

How Mortgage Loan is Affected By Credit Scores

A long time ago, getting a mortgage loan with poor credit was impossible. But, now lenders and other institutions have started to offer flexible programs that make you able to qualify yourself and your family for the loan. These mortgage loans are designed especially for those families and individuals with poor credit.

For the most part bad credit means you have negative hits against you on your credit report. Negative hits that hurt you slightly are things like inquiries on your credit, a late payment, etc. Things that might affect your credit a little more significantly are things like foreclosures or bankruptcies on your account. Luckily, there are other methods of getting approved for loans. The lenders will still always look at your FICO score but it won’t play quite as large of a role.

No Credit Home Loans

If you have little or no credit, you might qualify for this type of a home loan. I most cases, home buyers earn quite a large income so that they can afford a home. But, in some instances, due to past credit history, even if you make enough to purchase a home now, a bank may not qualify you for the loan but will rather ask that you wait for the credit to return to the amount where they can approve you.

ABC Loan Guide

There are quite a few banks and mortgage officers now that offer the no-FICO loan, but that doesn’t mean you don’t need anything. You have to first pass their other qualifying criteria. So you are aware, most banks will only finance up to 80% of the total loan, sometimes less. Also, the loan will always require full documentation if they are not requiring you FICO score. That’s is a fair trade-off if you ask me. What that means is that you must provide income documentation to the lender.

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