One of the challenges many first time home buyers often face when trying to purchase a home is a lack of established credit lines. Multiple credit lines such as credit cards, lines of credit, department cards, furniture store credit help build a person’s credit score when not overused and paid on time. Sometimes, people don’t have many trade lines of credit when first starting out or recovering from a financial crisis like a bankruptcy. In a bankruptcy the debt might be gone but also gone are the lines of credit the person had.
In an article published in the Columbus Dispatch “Credit Scores Might Soon Reflect Rental Payments,” Credit bureaus Experian and Transunion have begun incorporating some rental histories into credit scores.
A renter would have to pay through an authorized rent processing company contracted to work with the credit bureau. I recently spoke to a local Las Vegas mortgage broker, Leslie McGarry with CMG Financial. She said another alternative is to work with a good mortgage broker that can document your rental history and either have your rental history verified through another data collection agency and then added to your credit file as “supplemental info” or they can have the data added and request a rapid re-score with the credit bureau and obtain an updated credit score. This can be done in as quickly as one week.
Buyers should not assume they do not have the credit necessary when considering a home purchase. The best thing to do is find a real estate agent and consult an experienced loan officer. Not only are people’s credit sometimes better than they thought, but often the credit can be built and improved into the level of a qualified buyer.