I recently found out that trade-lines are very important when it comes time to be pre-qualified for a first time mortgage. Who knew? Again, my go-to mortgage rep, Linda Feriod informed me that someone with at least three active tradelines will generally have an easier time in being approved for a first time mortgage. Generally, I say. Here's my disclaimer, I'm a licensed real estate salesperson, not a mortgage rep. Okay, I'm glad we got that over with :-)
Nonetheless, Linda emphasized the importance of trade-lines and wanted to me pass this information along. Trade-lines are credit cards, student loans, car payments- anything that's reported to the credit report on a monthly basis. Utilities, cell phone and debit cards are not reported on a monthly basis and therefore are not considered to be trade-lines.
Each trade-line should have at least 12 month history and should be used at least a couple times a year. Linda suggested that using a credit card to buy groceries or fill up your tank and paying it off each month can be very useful in the mortgage pre-qualification process. There are also programs available for those who may need some help in improving their credit score. At this point, I'll say it's best to consult your mortgage professional.
photo credit: Andres Rueda
