Call to get Pre-Qualified: 800-806-9836 x280
USDA Loan Pro Logo
USDA Vendor Logo

What are the USDA loan requirements for individuals with little to no credit history?

April 8th, 2022 by chelseagardner

What are the USDA Loan Requirements for Individuals with Little to No Credit History?

USDA loan requirements with little to no credit in Texas, Tennessee, Florida and Alabama

There are USDA loan requirements for those that have little to no credit history to qualify for a USDA loan.

If a homebuyer does not have any established credit history, USDA qualifications do allow the ability to utilize certain non-traditional credit accounts. This will help increase USDA loan qualifying flexibility.

Today’s short video will walk you through the USDA loan requirements for individuals with limited credit history.

If you have not already done so, be sure to download our FREE USDA Blueprint for Success. This educational resource is designed to help walk you through the USDA process step-by-step and is designed for homebuyers and realtors alike.

USDA Credit Score Requirements

According to the USDA credit score guidelines, “A credit score is a statistical number that evaluates an applicant’s creditworthiness based on their credit history. The credit score considers payment history, amounts owed, percentage of credit used, length of credit history, types of credit and newly acquired credit.”

While USDA loans do not have a minimum published credit score, it utilizes the Guaranteed Underwriting System, or “GUS”, to determine the acceptable credit score for underwriting recommendations of an accept, refer, and refer with caution.

  • Accept response: For loans that receive an accept response, there is no credit score validation needed. Your credit profile could only have one credit score reported and provided you received a GUS accept, then no further validation is needed.
  • Refer or Refer with Caution responses: If you receive a GUS response of refer, refer with caution, or for manually underwritten loan files, USDA guidelines states that the “applicant must have two tradelines on the credit report that have been/were/are open for 12 months based on the date the account was opened as stated on the credit report. A validated score does not indicate the applicant has an acceptable credit history. A validated score confirms that one applicant has an eligible minimum credit history.”

Note: Secured and unsecured loans, revolving accounts, credit cards, collections, and even charged-off accounts may be used to validate credit scores. If your credit report does not support the minimum accounts required by USDA, then that is when you will use non-traditional or alternative credit history.

What is the Difference between Traditional and Non-Traditional/Alternative Credit?

Traditional versus Non-Traditional Credit in Texas, Tennessee, Florida and AlabamaTraditional credit refers to companies that report their accounts to credit bureaus such as Experian, TransUnion, or Equifax. These companies may include your auto loan and credit card companies.

Non-traditional credit, or alternative credit history, is just the opposite of traditional. These companies typically do not report to a credit bureau and may include your electric bill, water bill, phone bill, or rental payments through a management company or private landlord.

It is possible to meet the USDA qualifications with little to no credit history and we understand that the qualification requirements and process may seem difficult or overwhelming. Metroplex Mortgage Services is a USDA approved lender and can help you maximize your potential of this program and walk you through the USDA requirements with little to no credit history.

 

As a USDA and VA Approved Lender in Florida, Tennessee, Alabama, and Texas, let our experience and expertise go to work for you!

Just call, email, or text to discuss your scenario and let us show you the “Metroplex” difference!

 Toll Free: (800) 806-9836 X 280

Call/Text: (863) 451-3032
SeanS@MPLX.org

Don’t forget to download our USDA Blueprint for Success with this link.

Usda Blueprint for Success

back to top