how can i get a mortgage when I don’t use credit cards. I have NO debt.?

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I bought my first house, 5 years ago. paid every mortgage payment on TIME, never missed a payment. I bought a car and paid that off in 3 years. I sold my house last year at a profit paid off my mortgage in full and all outstanding debts, including a student loan. Now when I apply for a mortgage, every bank is turning me down. As I do not use credit cards, as part of my spiritual practice of not debting , not incurring new unsecured debt – one day at at time, i have NO credit score. Is there any way to get a secured loan mortgage. I have enough cash saved up ($ 4,000) to put 5% down on a 80,000 house. I have rented a house for past 12 months paying $ 660 per month. I pay ALL my bills on time, utilities, cell phone, etc. This feels insane, because I do not spend beyond my means, i can’t get a mortgage. Any suggestions. I;m looking into getting a SECURED credit card through my bank – but have been advised that it will take minimum of 6 months to a year to 1 year build up a credit history that way. I am retired on disability and have steady income from Social Security of $ 1290 per month NET.

  1. Reply
    May 16, 2011 at 11:09 pm

    The house you bought 5 years ago should be showing up on your credit reports.
    You didn’t delete it did you?
    And that car you paid off should be on there.

    How can you have a 0 credit score with all this?
    A mix of credit is only 10% of your credit score.
    You could easily achieve top scores with the mortgage and the car loans.

    Something is wrong with your reports.
    Get them at annual credit
    And review them carefully.
    If you have made loans in the past – the history stays for 20 years as long as you don’t remove it.
    Note: Plenty of people have no credit and buy their first house.
    Could it be that your income is not enough to support the loan you want?
    It’s not your credit – its your income – just ran the calculator.
    Max home you can afford is $ 47,000.

  2. Reply
    Lauren F
    May 16, 2011 at 11:31 pm

    If you have five years of on-time house payments and three years of on-time car payments, that should give you a very good credit score.

    Check your credit report for free at and make sure those payments were accurately reported.

    It could be that the amount you want to borrow is below $ 100,000 and large banks do not make much money on that amount. Try with local credit unions. They are often more flexible in helping write loans. I had great luck with the DVA Federal credit union. The Pentagon Federal Credit Union is also offering a very good deal on home financing right now as well.

  3. Reply
    Caveat Emptor
    May 16, 2011 at 11:53 pm

    If you’ve had a mortgage, auto loan and student loans in the past five years, you DO have a credit history and credit scores. I don’t what your “spiritual practice” means, but just having a credit card does NOT mean that you must be in debt.

  4. Reply
    PAUL D
    May 17, 2011 at 12:17 am

    With todays lending standards I don’t think any lender is going to let you use more than 50% of your income for a mortage. Typically 30-25% is tops.

    Nothing wrong with credit cards if you pay them off each month in full. There are many “rewards” credit cards with no annual fee. Some give you actual cash back. I would suggest also that you go to a credit union and open an account and begin banking some money into savings there. Credit Unions are more flexible in their lending practices.

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