need open tradelines for USDA approval?

[Anonymous]

I am cleaning up credit since divorce and finally reached the magic 620 number. LO stated that USDA requires open tradelines ( I have no credit cards since the clean up) and BOA wouldn't even give me the secured one. Is there truth to this or do I need to find another LO? Income, DTI, no collections, etc. are in compliance with USDA guidelines.

thanks for your help!

[ShanetheMortgageMan]

USDA doesn't have any trade line requirements per se, however each lender may have their own trade line requirements, and typically they are looking for 3 trade lines of 12 months each.  Not all lenders accept non-traditional credit, but those who do, if you can provide 3 non-traditional trade lines (such as utilities, rent, cell phone) that are currently open, have been for 12 months, and all payments are made on time, then your credit should be sufficient for USDA financing.

[Anonymous]

Shane, thank you for answering the question! I was considering have my husband put my name on his auto loan (never late history) but not sure if that was a smart move, even though it would not affect my DTI. The second LO I spoke to stated that 2 months of reserves would also look better with the tradelines issue.

Missy

1/09 TU 570            5/09   TU 599        8/25/09 TU 598 (lender) 640 (myfico)

       EQ 554                     EQ 604                    EQ 623

       EX  622                     EX ?                        EX  662 (lender)

[ShanetheMortgageMan]

That is true, having reserves available after closing is definitely a great compensating factor if there are shortcomings in other parts of your borrowing profile.

[Anonymous]

Your husband can' just add you to the loan.  You would have to refi the loan into both of your names and you would take FICO dings for the inquiry and the new account.  Not a good plan.

Are your utilities in your name?

Cell Phone?

Rent?

Those are non-traditional trade lines that they will consider.  Remember that they will require proof that these have been paid on time for the last 12 months.