Knoxville Loans For First-Time Buyers: What If You Have No Credit History?
There are many different Knoxville loans for first-time buyers. There are loan options for perfect credit and not so perfect credit, for those with a large down payment and those without a down payment, and for those wanting to take advantage of loans for first-time buyers.
But, what about those buyers with no credit history at all?
In this post, we’ll talk about how no credit history affects your ability to buy your first home and how to work on establishing credit.
Why Does No Credit Score Matter?
On the surface, it may seem like no credit should benefit you. After all, if you don’t have any credit history, you also don’t have any debt. Unfortunately, when you’re wanting to take out a loan and buy a house, a mortgage lender needs to know that you’ll pay them back. Without a credit score showing that it can be a bit harder to prove your ability to repay.
While you may not have a credit score, if you’re at least able to show that you have non-traditional credit, you may still be able to get a mortgage. It may just take a bit more work to get approved for a loan. With non-traditional credit, you show that there are certain bills that you pay on a monthly basis that are in your name. Depending on the loan type, you’ll have to show a certain number of these lines of credit in order to be approved for a loan.
Here are a few different lines of credit that could help you qualify for your loan:
- Monthly rent
- Cell phone bill
- Car Insurance
If you have no lines of credit at all, you will find it difficult, if not impossible, to buy a home. Since you have no proof at all of your ability to pay bills, you’re too much of a risk for loan approval.
It can take some time to start establishing credit, so you’ll have to be patient. But, with a little work, you’ll be able to establish your credit in not time.
The best way to start establishing credit is by getting a credit card. This can sometimes be a Catch-22. You need a credit card to build credit, but in order to get a credit card sometimes, you need credit. You’re best to try and get a credit card from your local bank. They’ll be able to see that you’ve got money in your checking account and be more likely to approve you.
Once you have a credit card, utilize it responsibly and on a regular basis. Don’t overuse your credit limits, instead just charge gas or groceries on it and be sure to pay it off every month. As you continually use your credit, your credit limits will increase and you’ll slowly start building a score.
Another option to work on building credit is to become an authorized user on someone’s account. Perhaps you have a spouse or family member who will be willing to add you to their account. Just be sure that this family member responsibly manages their credit, otherwise, you’ll be doing more harm than good.
Bottom Line: Credit Matters
Credit matters when you buy a home. Take the time to establish credit before you think about buying a home. While it is possible to buy a home with non-traditional credit, you’ll have to jump through more hoops than if you had credit.
Buying your first Knoxville home is an exciting and overwhelming experience. If you’re like most first-time buyers, you may not be sure where to start. If there is anything we can do to help you in your home search, please do not hesitate to contact us. We’ve helped countless homeowners buy their first home and we’d love to do the same for you. Rick can be reached at 865-696-9002 or via email at [email protected]. Kati can be reached at 865-696-1888 or via email at [email protected].
Are you ready to start your home search? Visit our home search page to get started today. Or, be sure to keep up with our Knoxville First Time Home Buyer’s Blog to keep up with the latest information about buying your first home.
To learn more about the different Knoxville loans for first-time buyers, visit our Mortgage Information Page.