Recently there was a comment on one of my blogs about Non Traditional Credit. For those who are not familiar with the term, Non Traditional Credit it is a process of creating credit history for Borrowers who have insufficient credit scores, or no credit scores at all.
There are basically three reasons why a Borrower has insufficient credit scores, or no credit scores at all:
The Borrower has never bought anything on credit before.
The Borrower had all their credit accounts closed, usually because of a bankruptcy, and has not reestablished credit again.
The Borrower had credit but stopped using it, because they purchases everything with cash. As a result they lose the credit scores that they once had. If the Credit Bureaus no longer have active credit accounts to evaluate a Borrowers payment history, then they will not be able to provide the Borrower with credit scores.
If a Borrower does not have credit scores, then they cannot qualify for a Mortgage, therefore,