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Alternate Sources For Establishing Credit in Milwaukee
Establishing credit in Milwaukee isn’t necessarily the hard part, but maintaining a good standing credit score is.
There are many alternate sources for establishing credit in Milwaukee, once you start you need to keep-in-mind that your credit score may play a vital role later on down the line when you are ready to purchase a mortgage.
A borrower’s credit score helps determine their down payment on a loan as well as pre-qualification status.
While the basic Rule-of-Thumb in Milwaukee for acceptable credit history is a minimum of four trade lines documented on a credit report, there are alternative methods of building a credit picture that an underwriter can use to make a decision for a loan approval.
For potential Milwaukee home buyers with little or no credit history, keeping records for 12 months of paying bills on time is essential for mortgage loan approval. In fact, loan officers will appreciate receiving proof that you have paid a variety of accounts regularly and on time. Even if you do not have a credit history, or your credit report isn’t as good as it could be, this may enable you to get a mortgage.
The industry term for this is “thin credit.”
Some loan types, namely FHA and USDA, will accept alternative credit sources in order to establish proof of financial responsibility.
Alternative credit is unreported to the bureaus, but will still be verified and can be instrumental in a home loan approval.
Those with thin credit don’t usually have bad credit, but have just not had an opportunity to build enough traditional credit, such as bank/store credit cards, auto loans, etc.
Alternative Sources for Building Credit Milwaukee:
- Rental History – Canceled checks and letter from property management company
- Medical Bills – 12 months of statements from medical billing company showing paid as agreed
- Utilities – power, gas, water, cable, cell phone
- Auto Insurance
- Health / Life Insurance – as long as it’s not auto-deducted from pay check
Establishing Credit in Milwaukee:
Several factors can be used to establish credit initially, including bank accounts, employment history, residence history and utility bills.
Although they are not reported directly to credit bureaus, bank account history is important to lenders for first time loans and should be kept in good standing.
While they are also not reported to credit bureaus, utility bills (such as electric, telephone, cable and water) can also show a lender the risk associated with a new borrower.
Credit may be initially established through a bank, in which a credit card is linked to a specific amount of money deposited in the bank. If the credit card is not kept in good standing, the bank can then take the secured funds for payment.
Initial credit may also be established with a department store credit card (for example), but borrowers should beware of the high interest rates associated with these cards and pay off the balances in full.