Can I get a Mortgage with no Credit?

Getting any kind of loan with no credit or bad credit can be extremely difficult, but it is not impossible. Most lenders look for people with good or excellent credit, and will extend loan offers only to these people who they consider “safe”. If you have no credit or have made financial mistakes in the past, then it is possible that you will be unable to get the credit that is offered so freely to other people.

Just because you have made mistakes in the past or because you are getting a late start on establishing your credit does not mean that you have to suffer for it forever, though. In addition to the option of finding someone with good credit who is willing to cosign a loan with you, you can also go looking specifically for sub prime lenders.

What are prime and sub prime?
Prime lenders will offer loans and mortgages to people with good or excellent credit. They take the safe road and do not stick their necks out for people with poor credit, bad credit, or no credit at all. It is safer to stay within the group of people who have established themselves as responsible and reliable with their payments.

Sub prime lenders, however, are willing to fish the deeper waters, so to speak, and will take risks on people with even the worst credit. These lenders protect themselves by offering high interest rates and tacking on a lot of fees, but the good news is that the sub prime market is competitive, and you can keep looking until you find someone willing to extend a reasonable offer to you. This means that even with bad credit or no credit at all, you can apply for and get approved for a mortgage, and buy your dream house.

Will buying a house help my credit?
Absolutely true, and using a sub prime lender to do it will not hurt your credit, either. Buying a house and making the regular payments establishes you as someone who has a steady source of income and is willing to be responsible about making payments. If your problem was no credit in the first place, then your score will come up to the good range rather quickly, and you will be able to refinance your home for a much better rate in a year or two.

If your problem initially was bad credit, then it will take longer to see significant improvement on your credit score. Making regular payments is wonderful, and will certainly help, but you also have to outweigh the mistakes of your past and deal with the bankruptcies of foreclosures that might already dot your credit statement. Still, these mistakes are in the past, and working hard to keep your payments will put good credit in your foreseeable future. Eventually your credit will rise enough to allow you to get a better rate, or to move on to a better home.