No Credit Score, No Mortgage?

Matthew doesn’t have established credit. What should he do when it comes to cell phone contracts that require a deposit or when it comes time to get a home loan?

QUESTION: Matthew doesn’t have established credit. What should he do when it comes to cell phone contracts that require a deposit or when it comes time to get a home loan?

ANSWER: On cell phones and utility contracts, there isn’t any exception. You’ll have to put up the security deposit, and you’ll get the deposit back. I still run into this, too. You’ll usually get your deposit back within a period of time.

As far as getting a home goes, the best situation that you can have under the current rules is credit coming out of your ears with a large FICO score. The next best place to be is to have no credit at all. It’s when you’re in the middle that you get pinched. When you have no credit, they have to actually do the underwriting.

If you have a 300 credit score because it’s on its way out, it’s a kind of no man’s land. In that scenario, it’s really tough—if not impossible—to get a traditional mortgage.

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