help with alternative tradelines..

[Anonymous]

hello all.

this past weekend I attended a home expo, and to my surprise, a lender pulled up my score and i have a midscore of 648.  so, he said that my numbers will qualify me.  we've started the procedure of processing the loan app.  i do have some collection accounts that my LO asked me to write LoX for, and I've written a 'personal history' of my last 3 years, to explain a period of unemployment in 2007. Now, i'm stuck on the 3 alternative tradelines (for FHA Loan). 

my LO explained to me that I will be needing three alternative credits to back up my application.  i'm having a bit of hard time here, simply because there is very little that is under my name.  most of our alternative credit 'history' is under my husband's name, but he's not being put on the loan because he has no credit history.(one of those, "no i don't like using credit type"...now he's scrambling to find some).  We are currently renting from my mother, so utilities are under my folks name, not ours...i don't have a 12 mth history with my phone (just barely got one...i'm from the stone age...so i'm at a loss.)

Back to the alternative tradelines:

1.   what we are thinking is, perhaps we can use car insurance. i am not the policy holder (my dad is), but i am added as a driver and I do pay my insurance to my dad who then makes the payment.  (Note: I am on my dad's policy because the car is under his name (although I do pay that as well <--again that is not under my name, so i can not use that either).  We have a good 12 mth payment history. Problem is, would this be sufficienct, wouldn't i still have to show how that transaction is done (i pay him for my portion of the payment usually with cash).

2.  My husband and I leased a home from Aug.2007-Aug.2008, and I am added on that lease along with my husband.  We had a perfect payment history on that, but I was concerned that 'alternative credit' had to be for the most recent 12 months...is that true?  And the fact that I was a a joint-tentant, would that hold any water?Would we just get a letter of credit from the landowner?

3.  Our last option is a cable bill. Currently, my husband and I pay rent to my mother, and we do pay the cable bill (as per mom's rule).   The cable bill is under my mother's name, but she suggested that we talk to the cable people to see if I can be added as well, since I have been paying that bill for the past 12 months (well, almost 12 mths in aug.)

 4. Would the rent that is paid to my mother have any standing? I pay with check, sometimes in cash.  She doesn't give me a receipt but she keeps track of the payments on a ledger.  Would that work?

any advice would be greatly appreciated. my LO has suggested things like utilities, but that is not an option.  neither is my cell phone. we're just trying to make it work right now..we'll see what happens.

thank u kindly for reading.

erica

[ShanetheMortgageMan]

When it comes to non-traditional credit, the account must be in your name, primarily because you need to obtain a "letter of credit" from them which lists your name and often the credit vendor (the company that the credit report is ordered from) needs to do an independent verification with that non-traditional creditor to be able to add it as a supplement to the original credit report (often something that lenders want).  The account must be current, although closed accounts can further support the 3 current non-traditional trade lines.  As far as the rent you pay, must be documented by cancelled checks or bank statements with the exact amount being withdrawn on/around the same day each month.

There are basically two groups, group I credit is weighed much more heavily than group II credit, although group II credit is still accepted by some lenders today.

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.