Your credit score, a numerical summary of your credit history, is used by lenders to determine your risk as a borrower. By using your credit score, lenders can tell within a matter of minutes if you are the type of risk they would be willing to take on and the cost at which they should let you borrow. There are some lenders that do not lend to borrowers that are a credit risk, i.e. those that have a low credit score.
If you are on the market for a home and have no credit or bad credit, it does not mean that you cannot be approved for a mortgage loan. Rather, you will have to work a little harder to find a no credit check mortgage. You will also have to do a little extra work to convince the lender that you are a trustworthy borrower.
With a no credit check mortgage, the lender does not use your credit score and history as the sole determining factor of your borrowing risk. Instead, the lender takes into account other factors about your financial situation such as your income and personal references. Using this information can help convince the lender that you are capable of repaying a mortgage loan. With this information to counter a bad credit score, you are much more likely to be approved for a mortgage.
The key to finding a no credit check mortgage is shopping around. Sometimes the most well-known lenders aren’t your best bet for finding mortgages that do not rely on credit checks. Using the resources available to you will prove to be far more beneficial. Check with banks, savings and loans, and credit unions that traditionally offer mortgages. Mortgage brokers are another source of information as they often have relationships with many different lenders. You might also ask your friends and family for references. Finally, you can use an internet search engine to find lenders of no credit check mortgages.
As with mortgages that do credit checks to decide whether or not to extend a loan to you, you should shop around for the no credit check mortgage that has the best terms to suit your needs. Since there is still some amount of risk for the lender, you might find that no credit check mortgages have higher interest rates and additional fees. By approaching several different lenders for quotes, you can minimize the cost to you as much as possible.