Question
I have a "thin" file. How will this affect me qualifying for a mortgage loan?
Answer
"Thin file" means that a consumer has a fairly short or "thin" credit history. In these situations, it can be difficult to accurately provide a credit score for the consumer since in essence there is no past history to score against.
When it comes to a mortgage, it depends on how "thin" your file is. Most likely, you have a pretty good score, but only have a few trade lines open, and for less than 24 months. Most lenders are looking for at least 2 or 3 accounts that have been open for at least 12 months, and have a substantial amount of activity. Some lenders have previously looked at alternate forms of credit, but in today's lending, the underwriters are scrutinizing every detail. There is a chance that if you have solid income, stable job history, significant down payment and additional assets, that you can be approved for a loan.
In order to build your credit file, you should use your credit regularly to pay for everyday purchases and pay them off every month. This will help you build responsible balance and monthly payment history which will bolster your ability to get a loan.
When it comes to a mortgage, it depends on how "thin" your file is. Most likely, you have a pretty good score, but only have a few trade lines open, and for less than 24 months. Most lenders are looking for at least 2 or 3 accounts that have been open for at least 12 months, and have a substantial amount of activity. Some lenders have previously looked at alternate forms of credit, but in today's lending, the underwriters are scrutinizing every detail. There is a chance that if you have solid income, stable job history, significant down payment and additional assets, that you can be approved for a loan.
In order to build your credit file, you should use your credit regularly to pay for everyday purchases and pay them off every month. This will help you build responsible balance and monthly payment history which will bolster your ability to get a loan.
Filed under: Mortgage
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kem63
Nov 17
2:19 am
I too have a thin file, I pay my mortgage on time every month for 12 years I have 5 years left on my mortgage. I pay my bills that is in my name on time and I have a checking account and savings for 10 years. how do get good credit if no one reports on my behalf and I can't get them to. I always get the run around
Reply Cancel ReplyCK Moderator
Surprised to hear you have a thin file even with a mortgage. Consider a secured credit card with Orchard Bank or Public Savings Bank. It does require a deposit. The upside is that there is no credit requirement and it will help cure your thin file status.
curtislee3
Sep 14
9:29 am
How long will it take to build a credit file?
Reply Cancel ReplyCK Moderator
You will have a credit file as soon as you get your first credit product.