Waterstone Mortgage Now Offering No Credit Score Mortgages. Is This A Game Changer?

Up until now, if you had bad or no credit history you couldn’t get a mortgage. Wisconsin-based Waterstone Mortgage announced yesterday that it is now lending to borrowers who do not have a credit history. Waterstone Mortgage is making the program is available in the 48 states.

Waterstone Mortgage is calling its program, the “Non-Traditional Credit Program.”

The company says it will use other payment history indicators. They will look at other forms of payment history like cell phone bills, rent, and utilities when underwriting a borrower.

Waterstone Mortgage is using data from the CFPB to justify its program. The company claims 45 million Americans have no credit score or outdated credit history. The three main credit reporting bureaus exclude utility bills and rent.

That means that approximately 18% of the adult American population is credit invisible.

Senior Vice President Kim Newby of Waterstone Mortgage told HousingWire:

While a credit score is certainly very useful for determining a homebuyer’s ability to pay their mortgage payment, other payment indicators can be extremely telling. Of course, the Non-Traditional Credit Program is ideal for borrowers who only use cash, debit, or personal checks on a regular basis. But it’s also designed for those who have had credit cards or loans in the past, but who haven’t utilized credit in more than two years. Also, recent immigrants who haven’t yet established a credit score in the United States could benefit from this program, as well as young adults and recent college graduates who are just beginning to build their credit.

Waterstone Mortgage also states borrowers without credit scores can also qualify for conventional, FHA, USDA, or VA loan options.

The big question is, is this a game-changer?