One potential problem for some MN first time home buyers is when they have no established credit. To many mortgage lenders, the 
absence of credit means they cannot offer mortgage financing due to mortgage loan requirements.
Fortunately there are some mortgage loan programs that still work with “non-traditional credit”.
What is non-traditional credit?
With a non-traditional credit report your mortgage lender can develop credit based on bills and payments that you are making but that are not yet reporting to a credit bureau. For example, if you are renting from a landlord, a credit bureau can call the landlord to verify the payments you’ve been making. Similarly the credit bureau can do this with other bills such as electricity, gas, cable, telephone, or even car insurance. The key is that you must have been paying the bill monthly for at least 12 months.
At least one of these items must be for housing, such as rent.
In order to build a non-traditional credit report you will need to collect the phone numbers and account numbers for any of these companies where you make a monthly payment. Your mortgage lender will give these to the credit bureau who will call each of these sources to develop the report.
It’s important to note that this process does not permanently add these creditors to your credit report. It only helps the lender develop their own report used for purposes of the mortgage loan program.
Why do I need to establish credit at all?
Lenders look at past credit history as a predictor of how a borrower will pay for the mortgage payment. If there is no history at all, there is no way for them to determine the relative risk of lending the money. Another way of looking at it is that smaller bill payments are like practice towards paying the largest bill, usually the mortgage payment.
What if my lender does not offer such a program?
It is important for first time home buyers to know that there are many lenders out there and each have varying rules and guidelines. If you’ve talked to just one lender who did not have the program, don’t be discouraged. Call or email me and and I can put you in touch with one that will.
Shawn Hartmann
Licensed Realtor in Minnesota
Keller Williams Realty
shawn@hartmannteam.com
Direct 651-468-9099
2680 E Snelling Drive North
Roseville, MN 55113
With a focus on Saint Paul Homes for Sale
Showing properties
1 - 5 of 500+.
See more City of St. Paul | Houses | Condos | Townhomes .
(all data current as of
5/19/2013)
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$3,250,000 : 34 Kenwood Parkway, St. Paul4 beds, 2 full, 3 part baths
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$2,275,000 : 340 Summit Avenue, St. Paul9 beds, 4 full, 3 part baths
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$2,100,000 : 350 St Peter Street ,Unit 1300, St. Paul2 beds, 2 full, 2 part baths
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$2,098,000 : 404 Mississippi River Boulevard S, St. Paul4 beds, 1 full, 3 part baths
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$1,950,000 : 1017 Summit Avenue, St. Paul7 beds, 2 full, 3 part baths
Listing information deemed reliable but not guaranteed. Read full disclaimer.
