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Is a credit report required to buy a house? #myth14

Fannie Mae, FHA (HUD) and OCC (Treasury) documents indicate non-traditional mortgage credit reports are acceptable.

| By Greg Fisher

Also, see Chicago Tribune’s uncorrected errors.

From: Greg Fisher []
Sent: Monday, May 11, 2015 11:27 AM
To: Carolyn Bigda, columnist, Chicago Tribune; Carolyn Bigda, columnist, Chicago Tribune (alt)
Cc: Gerri Detweiller; Gerri Detweiller (2)
Subject: mortgage loan, credit history requirement

See this message and your response at .

In the Chicago Tribune, you wrote, "For help on how to get started, Gerri Detweiler, director of consumer education at, offered this advice." #n521

Your piece continues: "If a bureau doesn't have a file on you it means you have no record of using credit. While that's OK for now, in the long term you need a credit report to take financial steps, such as getting a car loan or buying a home." #LifeWithoutACreditScore

However, a Fannie Mae guide states, "When the lender requests a credit score for the borrower, but the borrower has no score due to a lack of credit history with the repository, an acceptable nontraditional credit profile must be established which includes the following… "

The United States Department of the Treasury Office of the Comptroller of the Currency states: "Fannie Mae, Freddie Mac, and FHA each have established guidelines that lenders must follow when underwriting a loan for a borrower without a traditional credit score or history… FHA allows a lender to develop its own Non-Traditional Mortgage Credit Report (NTMCR) or to use a credit reporting agency to document the borrower's payment history."

According to the handbook "HUD 4155.1, Mortgage Credit Analysis for Mortgage Insurance" from the Federal Housing Administration, U.S. Housing and Urban Development Department, "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."

This is nothing new. In 2008 the assistant secretary for Housing, Federal Housing Commissioner wrote: "The Federal Housing Administration (FHA) has long permitted mortgage lenders to establish a borrower's credit history through nontraditional means, including the compilation of performance on rental payments; utility bills; telephone and cellular phone services; cable television service; payments to local stores, etc… This practice is appropriate when the borrower has insufficient trade lines with Equifax, Experian, or TransUnion and a credit bureau score cannot be derived."

See .

Do you still believe that a credit report is required to buy a house? #myth14

Greg Fisher
Truth and Falsity
PO Box 342
Dayton, Ohio 45409-0342

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