How to Establish Credit to Obtain a Mortgage Loan

When applying for a home loan, you need to show that you are a good credit risk. Credit cards paid on time are a good way to prove you are a good credit risk. But what if you do not have credit cards? Following you will discover ways to establish alternative forms of credit that can help you obtain an FHA loan (Federal Housing Administration) and USDA (United States Department of Agriculture) Rural Housing loan if you do not have credit cards.

Instructions

Difficulty: Moderately Easy

Things You’ll Need:

• Checking Account
• Cell phone, car, or other items that you are making payments on

1. Make a list of the items that you currently need to make payments. This may include things such as rent, car payments, car insurance, health insurance, cell phone, land line phone, internet service, electric, water, sewer, cable television, or satellite television. Items bought on time through local store, such as furniture, are also good to use for this.
2. For those things that you are making monthly payments on, always pay them on time.
3. Always pay by check. Keep receipts if available.
4. At the end of the calendar year, call the utility companies and the holder of your car loan, insurance (anything that you are making regular payments for) to request a report of your payment history. After doing this for two years, you have established that you can make timely payment of your debts. FHA and USDA look at this payment history as an alternative form of credit that can be used to help qualify you for a home loan.