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What Is Credit Worthiness?

Reviewed by: David Naimey

Approved by: Chad Turner


One of the biggest mistakes people make before applying for a mortgage loan is not checking their credit score. Applying for a mortgage loan without checking your credit first can be a costly mistake, either literally because your rate was increased resulting in a higher monthly payment, or figuratively when a lender denies your application. By checking your credit before your application, you will not be surprised about that bill that went into collections that you never knew you had, or a missed payment for an account you don’t remember opening at all. A mortgage lender will be finding out as much information as they can about you before approving your loan, which includes information that will prove to them that you will actually be able to pay this loan back. Your credit-worthiness is one of the biggest indicators of your ability to do this.

But what if I don’t have credit?

If you don’t have credit it is still possible to obtain a mortgage. The mortgage lender will use other factors to determine your ability to repay a loan. For example, if you pay rent to a private landlord, this will most likely not show up on your credit. However, you can use this to show evidence that you would be a perfect borrower by your ability to pay rent on time. Another way is to use what is called an “Alternative Trade,” which, for example, is a bill like insurance, cable/internet, or cell phone that would show your ability to pay on time. Usually for both of these options, the lender may require at least 12 months of verification for on-time payments as proof of your credit-worthiness.

In the part 3C, we will be introducing the Debt-to-income or DTI that all lenders use to qualify borrowers. Please click the link below to hop right in!

Part 3C: Annual Income and Debt-to-Income Ratio


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