HELP Figuring Out What To Do Next

[ladii06]

My fiance' and I were in the process of getting a home through USDA but the loan was denied due to only having 1 active tradeline on cradit(all auto loans on credit) so we decided to go FHA but ran into problems with getting the down payment so we just decided that was a sign to let the house go......we are really stuck with what to do next, we have a tax return coming for 5k and have some money saved to find a home throuh FHA but really rather get a USDA loan, if we were able to get a USDA loan we could pay his car off early and afford more home and ease the process since all of the homes we liked were a bit out of our range due to the car loan and would not need any money down for USDA. Would getting a gas card or credit card help to get a USDA loan? we need help with trying to do a USDA loan again since I know we would need atleast 2 active tradelines on credit but only have one.....Any help/advice would be appreciated.

[ezdriver]

I have had buyers in similar situation but the loan officers used supplemental credit [rent, utilities, etc] to get past the "thin credit" hurdle. About that auto loan, what is the balance, payment and when do yu plan to pay it off. You don't want to close out that tradeline prematurely. That plus two revolving credit tradelines would be sufficient to beef up your credit profile.

[bridgetkaryn]

For USDA, if you pay the autoloan down to where you have less than 6 months left to pay (make a lump payment and have the company adjust your # of payments remaining... Though check first and see if they would do that) it doesn't count in your DTI Ratio...

Also, if you are renting and willing to pay for it for your landlord, there are companies online that will list ontime rental payments for you through your landlord.

Good Luck!

[ShanetheMortgageMan]

Were you denied by the lender or denied by USDA themselves (after you made it all the way through underwriting)?

If you were denied by the lender, but you have sufficient credit history (but just 1 of the trade lines is active) then you may want to just try a different lender for USDA.  Not all lenders USDA guidelines are the same.  Like ez mentioned, some lenders will accept non-traditional credit history too.

If you were denied by USDA themselves then little you can do other than establish some new trade lines (like the gas & credit card you mentioned). 

I would not recommend you pay off your car loan unless you absolutely have to in order to qualify, as if you pay it off then you will no longer have that as an active trade line (it's helping your scores/credit history with every on time payment is reports).  Even if you have to pay it off to qualify, you can do that at closing on the USDA mortgage rather than before you apply.

[ladii06]

USDA denied the loan because the only thing on the credit was auto loans, we never had credit cards or any strudent loans etc. just car loans and only 1 is active right now, if we get a gas card and a credit card or 2 credit cards, how long would we need to pay on 2 credit cards before trying to apply for a usda loan again since the only thing that kept us from obtaining a loan through usda was having only 1 active tradeline, we would really like to find a house soon and fha pmi is freakin high on top of having to provide a dowm payment. Also, would having 2 credit cards on file improve our chances or would it still be looked at as a thin credit file with USDA. We never rented or had to pay utilities etc. we stay with my fiance's mother to help her out but the house is very old and need to find somewhere else to live due to the bad shape it is in, so only cell phone contract and car insurance was provided to usda to supplement the thin credit and I guess that wasn't enough for them.

[ShanetheMortgageMan]

The good thing about USDA is you can call them up and speak to someone directly.  They are a little busy but their phone #'s and email addresses are listed on the USDA contact info website - http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=GetRHContact&NavKey=cont... (I've found sometimes the information is outdated, but still call and usually you are routed to the correct person).  If they denied you because of limited credit history then they should've told you how much credit history they'd require so you'd have a plan.  If they didn't, then after you have an additional 6 months of credit history I'd apply.