One recent study found that 45 million Americans have no credit score. While some people might not mind that they have no credit, others get frustrated by this because it precludes them from getting loans and apartments. If you have no credit, what happens when you want to buy a house? Are there ways to buy homes if you do not have a credit score with the major credit reporting bureaus? You might find it harder to get approved without credit, but there are a few options you can pursue.
There is one option that allows you to buy a house without getting a loan. This option is through a process called seller financing. Seller financing is more popular than you might think, and it works well for people with no credit. Through this option, you find a homeowner willing to sell their house to you on contract. The seller agrees to keep the mortgage on the property for five to ten years, but you take possession of the house now. You make payments to the seller, and you treat the home as though it is yours. During this time, you can work on your credit, as you will need to get a loan when the contract ends. Seller financing is a great option for someone that cannot qualify for a home loan at this time.
The second option is an FHA loan. FHA loans offer a way to borrow money from a lender without meeting strict criteria. Lenders that issue these loans often make exceptions to people when they do not have credit or high enough credit scores. They might base your creditworthiness on your rental payment history from your apartment. They might also use other methods.
Understand Why Credit Is So Essential
Without credit, you can pursue the options listed here, but you might want to learn why credit matters. Your credit tells lenders if they should approve a loan or not. It tells them how well you manage money. Without a score, they cannot make these assumptions. Therefore, it might be worthwhile to start looking for ways to build some credit to make it less challenging to get a loan.
If you are interested in buying a house but have no credit, talk to a real estate agent or lender to find out more about no-credit financing. Even without credit, you might have options, so call today.