Alternative Credit: Phone Bill, Insurance; PG&E; etc.

On Monday, we mentioned a borrower who closed out all of his credit accounts to improve his credit which in fact hurt his credit. The only way the borrower can obtain mortgage financing now is by building what is called “Alternative Credit.”

Alternative credit includes payment histories that are not normally shown on credit reports. Borrowers have to provide proof of their payment histories for things like their phone bill, electric bill, insurance bill, etc. (any bills that are due on a regular basis).

We then put these payment histories on a credit supplement and use the alternative credit to help the borrower qualify for mortgage financing.

Not all lenders accept alternative credit, and the use of such credit sometimes requires a “manual underwrite” (something else that many lenders do not offer).

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646