How Many Tradelines Do I Need For a Mortgage?

How Many Tradelines Do I Need For a Mortgage?

  • Posted By: Admin
  • Posted On: 2022-04-05 00:36:58
  • Category: Blogs

Individual lenders determine credit Tradeline requirements for government and conventional loans. Borrowers are not required to have a certain number of credit Tradelines with FHA, VA, USDA, Fannie Mae, or Freddie Mac. Individual lenders can set their credit Tradeline requirements. Lender overlays are additional lending criteria that go above and above the minimum FHA, VA, USDA, Fannie Mae, and Freddie Mac guidelines. Lenders can have more stringent lending criteria than other agencies. Borrowers without credit Tradelines for Mortgage can qualify for government and/or conventional loans if they can acquire approval/eligibility through an automated underwriting system (AUS).

As part of their lender overlays, most lenders will need three credit Tradelines that have been seasoned for at least 12 to 24 months with on-time payments. Non-QM lenders often require two credit Tradelines for a Mortgage with a seasoning requirement of 24 months or three credit Tradelines with a seasoning requirement of 12 months. When a consumer has a credit Tradeline months or years ago, but it has been closed or paid off, it is referred to as a closed credit Tradeline. Lenders prefer to see open credit Tradelines that have been around for a while. Only credit Tradelines that have been seasoned for at least 12 months are valid.

Credit Tradelines are consumer credit accounts that are reported to credit bureaus. A credit Tradeline is defined by lenders as a credit account that is at least 12 months old and reports to credit bureaus. If a customer has a Blue Sky Visa secured credit card, for example, Blue Sky will disclose credit payment history to the credit bureaus.

The majority of creditors report to all three major credit bureaus:

Transunion, Experian, and Equifax

The following information will be posted by the creditor:

  • The minimum monthly payment date
  • Month and year account was opened (account history)
  • credit balance/credit limit
  • minimum monthly payment
  • date of last activity
  • payment history

The stronger and better a consumer's credit profile is, the more credit Tradelines for Mortgage they have:

  • A single late payment on a credit card will lower your credit score.
  • For seven years, the negative record will remain on the consumer credit report.
  • Overlays will be used by many lenders.
  • Due to lender overlays, most lenders will want at least three to four credit Tradelines that have been seasoned for 12 to 24 months.
  • This is true even if the borrowers receive approval/eligibility based on an automated underwriting method.


Do Mortgage Lenders Require a Certain Number of Credit Lines?

Individual lenders typically require Credit Tradelines as part of their overlays. Credit Tradelines are not required by lenders who do not use overlays. They simply rely on the Automated Underwriting System's conclusions (AUS). Applicants for mortgage loans who have no Tradelines for Mortgage but receive approval/eligibility from an Automated Underwriting System can qualify with a lender who does not require any overlays. 

Overlays From Lenders

As part of their overlays, several lenders have minimum credit Tradeline restrictions. Most lenders want a minimum of three credit Tradelines. Some lenders want four with 2 years of credit history. Others have stricter Tradeline credit requirements. On credit Tradelines, certain lenders may require a 12-month seasoning period, while others may want 24 months.

Are Credit Tradelines Required by Lenders?

Lenders may impose credit Tradeline seasoning requirements in addition to minimum credit Tradeline requirements. The majority of lenders require that each credit Tradeline have at least one year of seasoning before they may be considered for a mortgage. For example, if a borrower just obtained a Visa credit card and used it for six months, the credit Tradeline criterion would not be met. Mortgage loan candidates must have had good credit for at least a year with no late payments. Lenders assess borrowers' risk by looking at their credit history during the previous year.

Credit Tradelines That Have Been Seasoned For A Year There is still hope for mortgage loan applicants who do not have three credit Tradelines that have been seasoned for a year. If other components of the borrower's credit profile are excellent with offsetting considerations, few lenders will make exceptions. Low payment shock, reserves, and second employment that is not needed for income are examples of compensatory variables.

Tradeline for Non-Traditional Credit

We can employ rental verification or non-traditional credit Tradeline to replace credit Tradeline. The following are some examples of non-traditional Tradelines:

  • Charges for cell phones
  • Cable
  • Utility bill payment over the internet
  • Rent

Other invoices that have been paid regularly using a check and/or direct deposit over the past 12 months with no late payments

Please make all rental payments and any monthly payments by check so that they may be tracked and verified at all times. In the world of mortgages, there is no such thing as a cash payment. As proof of payment, mortgage lenders will always want to see canceled checks.

7 Steps to Mortgage Credit Preparation

1. Cross-check, your credit score report and Repair it NOW!!

Check your credit record for any difficulties many months before you plan to apply for a mortgage. If you usually pay your bills on time, Carolyn Warren, author of Mortgage Rip-Offs and Money Savers and Homebuyers Beware, recommends checking your credit two to three months ahead of time just in case you need to make any corrections. Warren advises customers who know they have late payments or other negative entries on their accounts to start clearing them up six to nine months in advance.

2. Call attention to any inaccuracies.

You should record inaccuracies and dispute with the credit agency assuming your credit report contains mistakes. For example, a neglected thing that you've paid or a record that isn't yours. According to a report released by the Federal Trade Commission earlier this year, about a quarter of the reports analyzed by the agency contained at least one "possibly substantial" inaccuracy.

3. Make certain you have a variety of Tradelines.

At least three Tradelines (any mix of credit cards, school loans, vehicle loans, and so on) must have been active during the last 12-24 months to qualify for a conventional loan. You require at least two Tradelines for FHA loans. It's OK to have more, but you won't be able to get a mortgage if you have fewer. If you need to open more Tradelines, Warren recommends acquiring a big credit card (not a retail credit card) at least six months before you apply for a mortgage and utilizing it for things you'd buy anyhow. 

4. Keep up with your current credit lines.

Keep more settled, "ready" MasterCard open whether or not you use them much to help you with aiding your FICO evaluation. "In any case, this is a basic blunder because your positive records work on your score." Attempt to use those Visas as expected and cover off the bill in full to keep those Tradelines alive.

5. Try not to open new credit accounts.

A half-year before you apply for a home loan quit opening new credit lines since this can briefly hurt your financial assessment. "A 10% markdown from a retail chain for getting another charge card does not merit diminishing your FICO rating."

6. Try not to assume a praise card to make a buy.

In the adventure of buying a home, certain individuals rush out to charge new machines or decorations before shutting down. Regardless of whether you're bonded, a relationship of outstanding debt to the take-home pay of the overabundance above 30% just before shutting could bring about your credit being denied. "Except if that is no joke," Warren suggests, "hold on until your credit is paid off before purchasing new furnishings." Wait to get a vehicle advance since vehicle advances are regularly more adaptable than contract prerequisites.

7. Don't juggle your cash.

You'll need to present several months' worth of bank statements for your checking and savings accounts when applying for a mortgage. "If you close an account unexpectedly or make a substantial transfer from one account to another, you'll have to paper-trail that entire account as well," Warren explains. It won't disqualify you, but it will cause a lot of paperwork." Also, gather your tax returns. These are needed to help verify your income for lending purposes.


Please contact Priority Tradelines if you need to qualify for a mortgage with a lender that has no lender overlays on government or conventional loans. We have several tradelines that can help assist with your mortgage purchase and help with your credit score.


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