What types of positive credit are mortgage lenders looking for?

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My hubby and I are working on improving our credit to become homeowners. Once I was told you needed to have a good mix of credit on your report to show you are responsible in all areas. We have two car loans, several student loans, and various other items.

We don’t have any credit cards, don’t really have a need for them. But everything I hear says you should have some revolving credit to show responsibility. I don’t want to get a credit card just for the sake of having one unless absolutely necessary.

Anyone with mortgage approval know anything about this?

  1. Reply
    February 5, 2011 at 4:50 pm

    I have been approved for several mortgages. No one has ever said that you need revolving credit, but I did read that it was needed. I got a credit card with a very high limit, simply to show responsibility. I have never used the credit card, so maybe you should consider applying for a credit card and restricting its use.

  2. Reply
    February 5, 2011 at 5:39 pm

    I’m actually a loan officer and can tell you that if you have a lower credit score, having 3-5 good open tradelines is needed for subprime lending.

    Pay off medical bills or high collection reportings.

    If you’re in IL or KY, e-mail me. I might be able to set you up with a pre-approval.

  3. Reply
    Kevin B
    February 5, 2011 at 6:25 pm

    Mortgage lenders don’t care what type of credit you have, just that you have some with a history of good payments. Its good to have 3 good accounts with one having a high balance of $ 5,000 or more. That could be the credit limit on a credit card or the original loan amount of an installment loan. If your credit score is at least 620, most lenders don’t even look at your accounts.

    If you have 2 credit cards and a car loan, you’re fine.

  4. Reply
    Credit Guru
    February 5, 2011 at 6:32 pm

    You have the basics of what mortgage lenders are looking for. They like to see a minimum of 3 trade-lines reporting positively for the past 12 months.

    Your interest rate will be determined by your middle score (of the 3 credit bureaus). The only credit score a lender uses is a FICO credit score. You can purchase only a Transunion score for $ 14.95 at http://www.transunioncs.com or for the same price for Equifax at http://www.equifax.com. You can purchase all 3 of your FICO credit scores for $ 44.85 from ww.myfico.com/12. They will also give you the top 4 reasons from each of the 3 credit bureaus as to why your credit score isn’t higher.

    Once you have your 3 FICO credit scores you can do some comparison shopping at http://www.myfico.com or at http://www.bankrate.com where you can find out rates for different loan programs.

    Good Luck

  5. Reply
    mortgage maven
    February 5, 2011 at 7:08 pm

    While mortgage underwriters don’t look, in particular, for revolving credit (i.e., credit cards), your credit score is based in large part upon their management.

    I recommend an assortment of regularly paid credit lines (credit cards, auto loans, etc.) so that you have both the requisite number of credit lines (their absence is called a “thin file”) AND a good repayment history.

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