| Just because you don't have a car payment, student | | | | Group 2 also accepts individual loans where the |
| loan, credit card bills or any other traditional trade lines | | | | repayment terms are written out and signed by both |
| tracked by the credit bureaus doesn't mean you can't | | | | parties. |
| qualify for a mortgage loan. | | | | FHA Rules for Non-Traditional Credit |
| Many times borrowers looking for a mortgage lack | | | | To qualify for an FHA loan with non-traditional credit |
| sufficient traditional credit history to provide a lender | | | | you should have 3 positive credit references and at |
| with a realistic credit score. No big deal. | | | | least one being a group 1-credit reference. To be |
| The good news for borrowers is that FHA loan | | | | accepted under FHA qualifications you must display - |
| qualifications consider non-traditional credit in cases | | | | in summary: |
| where you might have insufficient trade lines with | | | | - No late payments on rental housing (group1) |
| Experian, Equifax, and Trans Union. | | | | - No more than 1- 30 day late on other payments |
| Here's how it works. | | | | (group1) |
| Non-Traditional Credit References | | | | - No collection accounts (other than medical) in the last |
| FHA stipulates that you the borrower must have 3 | | | | 12 months. |
| credit references from 2 groups of non-traditional | | | | This is certainly good news for those that lack |
| credit sources. | | | | traditional credit references and trade lines with the |
| Group 1 - The first group of references is weighted | | | | credit bureaus. FHA recognizes that non-traditional |
| more heavily than the second because it is considered | | | | credit applicants can display credit responsibility, |
| a more accurate predictor of your credit worthiness. | | | | manage mortgages, and pay their bills on time thus |
| Group 1 consists of rental housing payments, utility | | | | should not be denied a fair chance at homeownership. |
| payments (gas, electric, water). Also included are | | | | See the article below for all the details on group 2 |
| telephone, and cable TV bills. | | | | credit references - as these are acceptable within |
| Group 2 - FHA qualifications are possible by including | | | | certain guidelines for establishing a positive credit profile |
| payment references such as: insurance payments | | | | with FHA - enabling you to qualify for the home you |
| (medical, auto, life, renters ins), payment to day care, | | | | thought was out of reach. It may be time to consider |
| internet cell phone, a 12 month bank documented | | | | an FHA loan? |
| history of deposits resulting in increased balance. | | | | |