In 2015, I blogged about the need for borrowers to have at least 3 tradelines or credit accounts.
That was because we used to see first-time-buyers with no credit established at all, so we would suggest obtaining secured cards (credit cards with cash collateral), retail-store credit cards and/or small car loans.
Insufficient credit is less common nowadays because Fannie, Freddie and FHA are more flexible, meaning that even one credit score or only one credit account is sufficient – as long as we can get an automated approval.
If we can’t get an automated approval, then we still recommend building credit by opening more accounts and/or by taking on credit-repair efforts.
Where we see issues arise more nowadays is on the jumbo mortgage front (or with mortgages that exceed conforming and FHA loan limits).
Most jumbo investors and lenders still require a minimum of three open and active tradelines or credit accounts, with at least 12 to 24 months (depending on investor) of seasoning.
Ironically, some of our strongest jumbo borrowers sometimes have too little credit because they rely on only one or two credit cards and have no other debt.
With housing prices increasing so quickly and more and more borrowers getting pushed into the jumbo arena, this blog is simply a reminder that jumbo lenders still want to see at least three open accounts.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167