How Many Credit Tradelines Do Non-QM Mortgage Lenders Require

[Rugger]

Non-QM mortgage lenders normally require three credit tradelines that has been seasoned for 12 months or two credit tradelines that has been seasoned for 24 months. Verification of rent is normally required. Credit tradelines are accounts listed on your credit report that show your credit activity and history. These tradelines include credit cards, loans (such as auto loans or student loans), mortgages, and any other credit accounts you may have. When applying for a mortgage loan, lenders will review your credit tradelines to assess your creditworthiness and ability to repay the loan.

For mortgage loan approval, lenders typically look for several key factors related to credit tradelines:

1. Payment History: Lenders want to see a history of on-time payments for your credit accounts. Late payments, delinquencies, or accounts in collections can raise red flags and negatively impact your mortgage approval chances.

2. Credit Utilization: This refers to the amount of credit you’re using compared to your total available credit. Lower credit utilization ratios are generally viewed more favorably by lenders. It’s recommended to keep your credit utilization below 30%.

3. Length of Credit History: Lenders may prefer borrowers with a longer credit history, as it provides more data on your financial behavior over time. However, this doesn’t mean that those with shorter credit histories can’t get approved; other factors are considered as well.

4. Types of Credit: Having a mix of credit types, such as installment loans (like auto loans) and revolving credit (like credit cards), can be beneficial. It demonstrates your ability to manage various types of credit responsibly.

5. Credit Inquiries: Each time you apply for new credit, a hard inquiry is recorded on your credit report. Multiple recent inquiries can indicate to lenders that you’re taking on a lot of new debt, which could be a concern when applying for a mortgage.

6. Derogatory Marks: These include items like bankruptcies, foreclosures, and judgments. Such marks on your credit report can significantly impact your ability to get approved for a mortgage.

Overall, a strong credit history with a consistent record of on-time payments and responsible credit management will improve your chances of getting approved for a mortgage loan. It’s essential to review your credit report regularly, address any errors or discrepancies, and take steps to improve your credit if needed before applying for a mortgage.