Alternative Credit & Home Loan Approval

Arizona Alternative Credit Mortgage

There are basic credit requirements that each Phoenix area mortgage applicant must meet in order to obtain loan/mortgage approval. Each different type of home loan (FHA, VA, Conventional, USDA and JUMBO) comes custom fit with its own set of credit guidelines or “rules.” When applying for a mortgage with an Arizona Mortgage Lender, a buyer may need to “beef” up or strengthen their traditional credit profile (the one that shows on their credit report) due to the fact that they either do not have sufficient credit activity/history and/or they have a pattern of derogatory activity (such as as a bankruptcy, foreclosure, short sale, late payments, judgments or liens).

Alternative Credit Helps Those with Little Credit 

When an Arizona home buyer does not have the required traditional credit history, we can oftentimes turn to alternative credit as a solution in order to help us meet the credit/trade line guidelines that are needed for loan approval.

What is “Alternative Credit”?

Essentially, alternative credit involves the buyer showing satisfactory payment history to their Phoenix Mortgage Lender (meaning no 30 day late payments) with companies or creditors that they make regular monthly payments to that do NOT report on their credit report as credit! The payment history that we document must be current (meaning the debt is active today) and must show a 12 month history (the most recent 12 months). Some examples of alternative credit include:

1.Utility Bill
2.Cable Bill
3.Car Insurance Bill
4.Cell Phone Bil
5.Gym Membership

To use alternative credit  your Arizona Mortgage Lender receive a letter from the alternative credit company that contains the following information:

1. Letter must be on Company’s letterhead
2. Letter must show borrowers full name
3. Letter must show borrowers full account number
4. Letter must state that borrower has zero 30 day late payments in past 12 months

The most commonly missed item is #4. The Company must state this part as it is stated above.

By Jeremy House

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Jeremy is the Founder of The HOUSE Team and a Sr. Loan Officer/Branch Manager with PrimeLending. Over the past several years he has ranked in the top 1% of all loan officers nationwide and one of the top 200 loan officers in America. In the mortgage industry, the devil is in the details. Jeremy prides himself on being a student and an expert when it comes to everything mortgage related.

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Comments

  1. IF ONE HAS TO JUMP OVER HOOPS JUST TO QUALIFY FOR A VA HOME lOAN, AND I KNOW FOR A FACT I HAVE NEVER BEEN LATE WITH ALL THOSE ITEMS LISTED ABOVE, THEN WOULDN’T THIS BE YOUR JOB TO OBTAIN THIS RATHER THEN FOR ME TO DO THIS ??
    ALSO, YOUR VIDEO DOESNT WORK. FOOD FOR THOUGHT!

Trackbacks

  1. […] such as rent payments, auto insurance payments, cell phone payments and utility payments.   Click HERE for more information on how to document alternative […]

  2. […] Borrower must have 3 tradelines either on their credit or with the usage of alternative credit […]

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