Here are the guidelines directly from FHA:
must have a minimum of 3 sources of credit with a minimum of 12 months of history. The last date of activity should be less than 36 months from the date of the loan application. This indicates information about the borrower’s financial picture is current.
Provide non-traditional credit from Group I as shown below for a total of 3 sources of credit (traditional or non-traditional). When necessary, Group II may be used when Group I has been exhausted.
Group I – rental housing payments (subject to independent verification if the borrower is a renter), utility company reference (if not included in the rental housing payment), including gas, electricity, water, land-line home telephone service, cable TV. If the borrower is renting from a family member, request independent documents to prove regularity of payments, such as cancelled checks.
Group II – insurance coverage, i.e., medical, auto, life, renter’s insurance (not payroll deducted); payment to child care providers – made to a business providing such services; school tuition; retail stores – department, furniture, appliance stores, specialty stores; rent to own – i.e., furniture, appliances; payment of that part of medical bills not covered by insurance; Internet/cell phone services; a documented 12 month history of saving by regular deposits (at least quarterly/non-payroll deducted/no NSF checks reflected), resulting in an increasing balance to the account; automobile leases, or a personal loan from an individual with repayment terms in writing and supported by cancelled checks to document the payments.
Retired Lender
Starting Score: 588
