Dave Ramsey Says You Can Get a Mortgage Without a Credit Score. Here's How
- You'll often hear that it takes strong credit to qualify for a home loan.
- Dave Ramsey insists that it's possible to borrow for a home purchase even without a credit score.
- You'll need to provide more information to the lender through a process called manual underwriting.
It may just take a little extra effort on your part.
Most people can't afford to purchase a home outright. That's where mortgages come in.
Now, there are different factors that mortgage lenders tend to look at when evaluating home loan applicants, and a big one is your credit score. That number provides a snapshot of your trustworthiness as a borrower.
If you have a high credit score, it tells lenders the following:
- You're good at paying your bills and obligations in a timely manner
- You don't have an excessive amount of debt
- You haven't recently applied for a lot of new credit
It's a scenario people find themselves in for different reasons. If you're a young adult who's yet to really have bills to cover on your own, you may not have enough of a credit history to have a credit score established. And if you're someone who makes a point not to take on any debt at all, you may not have a credit record either.
But if you plan to purchase a home and need to finance it, don't panic. Financial expert Dave Ramsey insists that you actually don't need a credit score to qualify for a mortgage. You just need to find a lender who's willing to work around that issue.
How to get a mortgage without a credit score
A credit score makes it easier for mortgage lenders to assess your ability to repay a home loan. But there are other steps lenders can take to get that information.
Ramsey says that if you apply for a mortgage without a credit score, you'll have to go through a process called manual underwriting. That means having to provide additional documentation, like bank statements and pay stubs, so your lender can assess your ability to repay a loan.
In reality, though, this is information you'll generally have to provide to your lender even if you have a credit score. Or, to put it another way, going through manual underwriting really isn't such a big deal. Ramsey acknowledges that it may take a little longer than applying for a mortgage with a credit score, but it's totally doable.
It's not a deal-breaker
Not every lender offers manual underwriting, warns Ramsey. You may need to make some extra calls to find a lender that will give you a mortgage without a credit score. But if you're willing to make that effort, you may find that you're able to get the financing you need to purchase a home -- even if you have no credit history to point to.
Now, if you have a poor credit score, that may be a deal-breaker. It takes a minimum credit score of 620 to qualify for a conventional mortgage, but many lenders will want to see a higher number than that. If your score needs work, it pays to do what you can to boost your credit score before applying for a mortgage so you don't have to face rejections.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2023 The Ascent. All rights reserved.