YOU might be surprised to learn that you can actually take out a loan without a credit score.
Four main factors can determine your credit score.
The personal finance expert breaks down a no-score loan
These are your debt history, how long you’ve had debt, outstanding debt and any debt taken on in the past 12-18 months.
However, some have not established or do not have credit.
The reason why you might not have one is if you never carried debt, or there is a lack of information in your credit history.
Luckily, there is a way to still get a loan including a mortgage, according to personal finance guru George Kamel, who’s part of Ramsey Solutions.
He shared how you can do this in an appearance with Fox 32.
How to get a mortgage without credit
Mr Kamal revealed that he actually took out a loan himself without any credit in 2019.
He did this through a process known as manual underwriting, also known as a no-score loan.
Through this process, lenders look at your whole financial situation instead of solely your ability to pay back debt.
This includes your W-2 forms, payment history, utility bills, according to Mr Kamal.
“They give you a mortgage based on all of that,” he said.
“You can get a great rate as long as you have a good down payment.”
What you should know about your credit score
Mr Kamal also provided some insight on how you should look at your credit score.
While high credit scores can help you get more favorable rates and save money, this does not mean you are in a great place financially, he noted.
For example, credit scores reveal how well you manage debt – not necessarily money.
“If I hand you $1million today, it does not improve your credit score,” Mr Kamal said.
Big raises also don’t boost your rating either.
The downside of having a low credit score
Now, keep in mind that a low score can still impact you.
“Let me be clear, no credit score is not the same thing as a bad credit score,” Mr Kamal told The Sun.
‘If your FICO scores lands below the 670 mark, or your Vantage Score number is below 600, you’ve got some work to do to clean up your debt mess.”
In fact, I can relate to this.