Securing a mortgage without a credit score may seem daunting, but it’s entirely possible. The process typically involves manual underwriting, where a lender evaluates your financial information personally rather than relying on algorithms. While it requires more documentation and effort, this approach allows applicants with no credit history to demonstrate financial responsibility in other ways.

Here’s everything you need to know about getting a mortgage with no credit and how to prepare for the process.

What Does It Mean to Have No Credit?

Having no credit, or being “credit invisible,” means there’s insufficient recent activity in your credit history for the credit bureaus to generate a score. Common reasons for having no credit include:

• No prior credit experience: Young adults or individuals who’ve never used credit cards or loans fall into this category.
• Inactive credit usage: Retirees or those who’ve paid off debts and stopped using credit may lose their credit score over time.
• Immigrants without U.S. credit history: Recent arrivals to the U.S. often lack a credit record with American credit bureaus.

It’s important to note that no credit is not the same as bad credit. While repairing a poor credit score can take years, building credit from scratch often takes just a few months.

Can You Get a Mortgage With No Credit?

Yes, you can get a mortgage with no credit. However, it typically involves manual underwriting rather than automated processes.

Automated Underwriting

Most lenders use automated underwriting, where algorithms analyze your credit history, income, and debts to determine eligibility. Without a credit score, you’re ineligible for this streamlined process.

Manual Underwriting

Manual underwriting involves a loan officer personally reviewing your financial documentation. While more time-intensive, it allows flexibility for applicants with no credit score. You’ll need to provide:

• Proof of regular payments: Document on-time payments for rent, utilities, and other recurring expenses.
• Financial records: Include tax returns, pay stubs, and bank statements.
• Employment verification: Provide proof of steady income for at least two years.
• Cosigner details (if applicable): A cosigner with good credit can strengthen your application.

Mortgage Options for Applicants Without Credit

Several mortgage types accommodate buyers without a credit score, often requiring manual underwriting.

Conventional Mortgages

• Require higher down payments (often 20%) if you lack credit.
• A low debt-to-income ratio (DTI) improves your chances of approval.
• Private mortgage insurance (PMI) applies if the down payment is less than 20%.

FHA Loans

• Designed for those with limited or no credit.
• Accept nontraditional credit histories, like consistent rent or utility payments.
• Require a minimum 3.5% down payment for credit scores of 580 or higher. Without a score, a 10% down payment is standard.

VA Loans

• Available to veterans and active-duty service members.
• Allow manual underwriting and don’t require a down payment in most cases.

How to Build Credit for Easier Mortgage Approval

While you can get a mortgage without a credit score, having one simplifies the process. Building credit from scratch can take as little as six months. Here’s how:

1. Use an Inactive Credit Card

If you already have a credit card, making a small purchase and paying it off immediately can reactivate your credit history.

2. Apply for a Secured Credit Card

Secured credit cards require a deposit, which serves as your credit limit. Using this card responsibly can establish a positive payment history.

3. Take Out a Credit-Builder Loan

Credit-builder loans are designed to help people establish credit. Payments are reported to credit bureaus, improving your score over time.

4. Monitor Your Progress

Sign up for a service like Scoresense to track your credit-building efforts and ensure accuracy in your credit report.

Key Considerations for Applicants With No Credit

If you’re applying for a mortgage without a credit score, focus on these factors to strengthen your application:

1. Save for a Larger Down Payment
   A higher down payment reduces the lender’s risk and improves your chances of approval.
2. Keep a Low DTI
   Aim for a DTI under 36%, which reassures lenders that you can manage additional debt.
3. Document Financial Responsibility
   Provide thorough records of timely payments for rent, utilities, and other recurring obligations.

The Bottom Line: Can You Get a Mortgage With No Credit?

Can you get a mortgage with no credit? The answer is yes, but it requires preparation and extra documentation. Manual underwriting allows lenders to evaluate your financial responsibility without relying on a credit score. However, building your credit before applying can open more options and simplify the process.

To start improving your credit, consider secured credit cards, credit-builder loans, or reactivating existing accounts. Monitor your progress with Scoresense, and you’ll be on the path to achieving your homeownership goals. Whether you proceed with or without a credit score, demonstrating financial stability is key to securing a mortgage.

If you ever need expert assistance or guidance on your credit journey, don’t hesitate to reach out to the Nerds! Additionally, stay updated with the latest tips and information by following us on Facebook, Instagram and TikTok!