If you have had problems with credit, and possibly a bankruptcy or foreclosure due to the economic times we are in. Then you may be like others who after these events, will become a “cash buyer” and not use your credit. At certain levels that is respectable and understandable. But not using credit because of what happened in the past doesn’t completely show discipline. How? Well, it doesn’t prove how you would manage debt if you had access to credit.
As a rule of thumb, if you had issues and as a result maybe a few older cobwebs on your credit. But say you didn’t have any open credit cards that were active and revolving. I can tell you that your FICO score will be between 550-580 every time. If you don’t re-establish your credit through opening revolving credit (credit cards) then your score will never pierce the ceiling you need it to , to be able to qualify for a home loan. Sure, lenders will tell you that they can help you with a score in the upper 500’s, but enjoy that pain and frustration while they bumble around trying to get you into the house. Also, if they do, what interest rate will you pay? If you knew what the increased cost of interest over the life of that mortgage was, versus working towards a 640 FICO, you might cringe.
The reason I mention all of this , is I sat with someone yesterday who had previously sat with 7 loan officers. None of which mentioned they needed to open credit card accounts to build their score. Talk about wasting time while trying to prepare to qualify to buy a house. The client had really no debt, so with an income of $70K per year, they will easily qualify for a $250,000 house.
Make sure you are working with an experienced lender who also cares.