Many people strive to live a “debt-free life”. This can mean they carry no debt by paying their credit card balance in full each month, or it can mean they do not have any credit cards, lines of credit, or even student loans. Although living completely debt-free may sound like a fantastic goal, it may end up not being ideal when you apply for a mortgage. According to the National Association of Realtors, in 2014 only 5% of first-time homebuyers purchased a home without having to obtain a mortgage. That means that for 95% of first-time homebuyers, your credit is going to be extremely important to you!
Many financial advisors stress the importance of moderation and flexibility with your credit. Having credit available, and even having some debt, doesn’t necessarily mean you are living beyond your means or will get in trouble financially. What it does mean, as long as you don’t overextend yourself or make late payments, is that you are responsible and are a good financial risk for lenders to take. After all, a mortgage lender takes a risk with every loan they extend, which is one of the reasons it is extremely beneficial to work with a lender like CityWorth Mortgage who sees its clients as more than just a credit score. We take the time to get to know all of our clients individually and understand their unique and individual credit histories.
If you are firmly opposed to opening credit card accounts, which can build credit quickly and effectively, you do have another option commonly known as an alternative credit option. Alternative qualifying methods can build a credit history based on rental payments made, your payment of utility bills, and possibly your payment of insurance premiums.
If you have limited or no credit history, or an alternative credit history and are interested in qualifying for a mortgage through the use of alternative qualifying methods, please call us today! We see our customers as more than just their credit scores, and we look forward to partnering with you to work towards your dream of home ownership.