No credit, no loan. FALSE!

I had a client who was referred by their Realtor, whom I have never met and works in the valley. The client told me that they had been turned down because they have no credit score.

The banks claimed that because there was no credit score, they could not sell the loan because it did not meet the new QM rules. QM is qualified mortgage which is a new rule (January 2014) that says banks must now know that the borrower for sure can make the payment. Debt ratios and credit enter into this calculation.

The fact is that Fannie Mae and Freddie Mac both have guidelines for measuring the borrower’s capacity to make payments outside of traditional credit. This goes way back to when they started writing guidelines for people who come from cultures where credit is not used.

If you have a blank credit report, there are loans still available to you. We will look more closely at rent-to-mortgage-payment increase, help you build alternate credit and look at the overall qualifying picture.

No credit does not mean no home or no refinance.