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FHA alternative credit:

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Anonymous
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FHA alternative credit:

Hello,

 

I have been a lurker here since last fall.. finally decided to join as I have started my credit rebuild...

 

I have student loan judgement was filed against me (not showing on my credit report). However the judgement was filed but NOT enforced as I am a state worker for the state of rhode island and i already have child support being deducted from my pay. I received a letter stating judgement not enforced due to the fact that they can't exceed 25% of my gross pay... This was last summer.. On my own accord i wentt and called the student loan company and made an arrangment of $69/mo. It is actually 3 small loans I pay $22-24 on each. This has been paid on time since 9/1/14. The student Loan company is local to RI and they told me they report to experian but in pulling my credit report that have not been doing so... The status shows as "transfered/ unavailable" and it isn't  listed a as judegment. It shows no current payment history.

 

Once i decide to apply for a mortgage early next year will I be able to use this as an alternative tradeline assuming i pay 12 months on time? I can print out my payment history showing on time payments. I don't not want them to report this as a judgement at this point so im leaving the status as is.

Message 1 of 9
8 REPLIES 8
Anonymous
Not applicable

Re: FHA alternative credit:

The way I understand it is that for FHA they don't pull judgement history info from your credit report but from a legal record system. Maybe one of the loan officers who are members in the community will answer and know if that is for sure. 

Message 2 of 9
Anonymous
Not applicable

Re: FHA alternative credit:

Yeah I Had a bankruptcy chp 13 7 years ago  that has fallen off of my experian and transunion reports. but its still listed as a public recoord on file with the courts. When I try to search public records online it just lists one record and im assuming its the bankruptcy. So I gather that the judgement did not actually get 'approved' through court to be placed on my record...

 

with that being said will this student loan be appropriate as evidence of FHA  alternative credit since it being paid on time? it will be 12 consecutive months of payments by 8/4/15.

Message 3 of 9
Anonymous
Not applicable

Re: FHA alternative credit:

I personally think a collection that has turned into a judgement would not be a valid alternative trade line but I can't find anything that specifically says so. It just seems not likely that a lender will see that as a positive, because technically, since its a judgement from a collection, it's derogatory, plus you are required to pay it anyway, with a judgement if you didn't pay it then eventually they would garnish your wages and taxes after your child support was no longer taking up all of your allowable garnishment percentage. Even if you have a payment plan in place, if there is a judgement they can and will still garnish you, at least in Oregon.

 

 

I did find this online, maybe it will be a little helpful?

 

"Possible types of non-traditional credit (preferred–at least one of these types of sources are required):

 

rent payments
utilities (telephone, electricity, gas, water, garbage, cable, etc.)–not included in housing payment.

 

Other acceptable sources of non-traditional credit are (two out of three sources may come from here)

 

insurance (medical, auto, life, renter’s, etc).
payment to child care providers
internet/cell phone service
personal loan with terms in writing supported with canceled checks
department, furniture, rent-to-own stores, etc.
a documented 12 month history of saving by regular deposits (at least quarterly) that are not payroll (automatic) deducted.


Note: Debts that are paid automatically from your payroll are not allowed to be used in documenting non-traditional credit. Lenders want to make sure that you are able to make timely payments “voluntary”.

 

The “form of proof” can be:

 

canceled checks for the last 12 months, or
written letter from creditor which is written on their letterhead, includes your name and account number stating the you have made on-time payments during the last twelve months. The letter should include what the payment amount is and the total amount due.


In order to qualify for a non-traditional credit approval with FHA, over the last 12 months, there must be:

 

No late payments for housing.
No collections or court records reporting (with the exception of medical).
No more than one 30 day delinquency on payments due to other creditors."

Message 4 of 9
Anonymous
Not applicable

Re: FHA alternative credit:

Also, the judgement doesn't need to be placed on your credit report, or approved to be place on your credit report, it's still a judgement and most lenders will have a way to search legal court records to make sure you don't have outstanding judgements, it won't matter whether it is on your credit report or approved to be on your credit report.

 

 

Heres a reply I found in another thread about whether or not a person should tell their lender they have a judgement that is showing up on their credit report.

 

"You must disclose all judgements (when applying for a mortgage). While you cannot find any information on the Judgement, it does not mean it will not be found. Failing to disclose information, will most likely give you a denial and possibly report you for Mortgage Fraud."

Message 5 of 9
Anonymous
Not applicable

Re: FHA alternative credit:


@Anonymous wrote:

Hello,

 

I have been a lurker here since last fall.. finally decided to join as I have started my credit rebuild...

 

I have student loan judgement was filed against me (not showing on my credit report). However the judgement was filed but NOT enforced as I am a state worker for the state of rhode island and i already have child support being deducted from my pay. I received a letter stating judgement not enforced due to the fact that they can't exceed 25% of my gross pay... This was last summer.. On my own accord i wentt and called the student loan company and made an arrangment of $69/mo. It is actually 3 small loans I pay $22-24 on each. This has been paid on time since 9/1/14. The student Loan company is local to RI and they told me they report to experian but in pulling my credit report that have not been doing so... The status shows as "transfered/ unavailable" and it isn't  listed a as judegment. It shows no current payment history.

 

Once i decide to apply for a mortgage early next year will I be able to use this as an alternative tradeline assuming i pay 12 months on time? I can print out my payment history showing on time payments. I don't not want them to report this as a judgement at this point so im leaving the status as is.


This is the FHA guidelines from the HUD website:

 

"The lack of a credit history, or the borrower’s decision to not use credit, may not be used as the basis for rejecting the loan application. Some prospective borrowers may not have an established credit history. For these borrowers, including those who do not use traditional credit, the lender must obtain a non-traditional merged credit report (NTMCR) from a credit reporting company, or develop a credit history from

-utility payment records

-rental payments

-automobile insurance payments, and

-other means of direct access from the credit provider"

 

Do you have any of the above?

 

If you have insufficient credit history or are using non-traditional credit, you have to have a clean 12 month rental history, no more than one 30-day late to any other creditors in the past 12 months, and no collections/court records (other than medical) filed against you within the past 12 months.

Message 6 of 9
Anonymous
Not applicable

Re: FHA alternative credit:

 And typically, court-ordered judgments must be paid off before being eligible for an FHA loan. However, an exception can be made if you have a documented repayment agreement and can prove a history of timely repayment.

Message 7 of 9
Anonymous
Not applicable

Re: FHA alternative credit:

thx, seems safe to say it should be allowed as alternative credit.. i only have one addtional student loan showing on my credit report as any open accouint.. i did just open the capital one credti steps card this month as well..

 

I feel like with my 14 month perfect rental history and theses three student loans that are being paid timely for the last 9 months that i sopuld have enough to establish alternative credit once i hit the 12 month mark on the student loans...

 

Thanks for the info!

 

 

Message 8 of 9
Anonymous
Not applicable

Re: FHA alternative credit:

FYI, a requirement on the minimum number of tradelines is not mandated by Fannie Mae, Freddie Mac, or FHA... only score requirements.

 

A tradeline requirement is a lender overlay, and every lender has different overlays regarding minimum or alternate tradelines.

 

Also, when going conventional, some PMI companies have their own overlays to issue coverage as well.

Message 9 of 9
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