Acceptable Credit
In the previous section, acceptable credit was noted as a borrower requirement for a USDA loan. This page defines acceptable nontraditional and traditional credit.
Nontraditional Credit
--Nontraditional credit may not be used to enhance poor payment records or low traditional credit scores.
--Three nontraditional sources are required for applicants with current rent/housing history. Rent/housing may be included as one of the three trade lines.
--Four nontraditional sources are required for applicants with no rent/housing history. Tradeline sources must be open and have a 12 month history.
--Lenders may collect canceled checks, money order receipts, and/or written verifications that include the creditor’s name, date the account was opened, account balance, monthly payment due, and payment history reported in 0x30, 0x60, 0x90 format.
--Acceptable trade line sources include a recent 12 month payment record of
rent or housing, utilities, insurance, school tuition, payments to retail stores, and evidence of cash reserves that equal no less than 2 months of PITI payments acquired through steady periodic savings deposits over 12 months.
--Applicants may only have one 30 day delinquency on any nontraditional trade line within the last 12 months. 60 and 90 day delinquencies or reports of disconnection notices are not acceptable.
--The applicant must have a credit history which indicates a reasonable ability and willingness to meet obligations as they become due. Any or all indicators of unacceptable credit history must be factored into the lender's decision more >>>>>>>>
--Three nontraditional sources are required for applicants with current rent/housing history. Rent/housing may be included as one of the three trade lines.
--Four nontraditional sources are required for applicants with no rent/housing history. Tradeline sources must be open and have a 12 month history.
--Lenders may collect canceled checks, money order receipts, and/or written verifications that include the creditor’s name, date the account was opened, account balance, monthly payment due, and payment history reported in 0x30, 0x60, 0x90 format.
--Acceptable trade line sources include a recent 12 month payment record of
rent or housing, utilities, insurance, school tuition, payments to retail stores, and evidence of cash reserves that equal no less than 2 months of PITI payments acquired through steady periodic savings deposits over 12 months.
--Applicants may only have one 30 day delinquency on any nontraditional trade line within the last 12 months. 60 and 90 day delinquencies or reports of disconnection notices are not acceptable.
--The applicant must have a credit history which indicates a reasonable ability and willingness to meet obligations as they become due. Any or all indicators of unacceptable credit history must be factored into the lender's decision more >>>>>>>>
Traditional Credit
--Traditional credit is evaluated using FICO scores, so it is important for the FICO scores to be representative of the applicant's credit history. Therefore, at least three sources of traditional credit are required. The tradeline sources must be open and have a 12 month history.
--The applicant must have a credit history which indicates a reasonable ability and willingness to meet obligations as they become due. Any or all indicators of unacceptable credit history must be factored into the lender's decision more >>>>>>>>
--The applicant must have a credit history which indicates a reasonable ability and willingness to meet obligations as they become due. Any or all indicators of unacceptable credit history must be factored into the lender's decision more >>>>>>>>