15 Jul 2019

How Does Credit Piggybacking Work With Mortgages?

Ah, purchasing a mortgage, that bastion of financial success, the flashing sign that you’ve made it, the smartest way to spend money, and the best way to build wealth. 

Is this still true? 

In times past Real Estate was the smartest way to use your money, because, like the stock market, housing values (while experiencing minor dips occasionally, usually went up over time), but then 2008 happened. Prior to that year, hedge funds and other financial institutions [cough big banks] created mortgage-backed securities, and insurance companies covered them with credit default swaps. High demand for this rock-solid can’t-fail securities led to an asset bubble, then the bubble popped. Markets recovered, banks got bailed out, but people still lost trillions of wealth. 

So are mortgages still a good thing to buy?

Of course! People need places to live. That’s never going to change. But…your credit, you need help, so can adding tradelines get you approved for a mortgage? Let’s get into the nitty-gritty first.

What Credit Score Do Mortgage Companies Use?


FICO. That’s it. So if you have a login to Equifax or Credit Karma, you’re getting a general idea of what your scores are, but an Experian login (usually), is more accurate since FICO is the Experian scoring model. But you won’t know for sure what your scores are until a lender pulls your reports. This is an inquiry, so it’s best to go in confident that you can get an approval as inquiries/hard pulls do affect your credit. Do you need anything special on your report to get approved for a mortgage? As in, should you purchase a mortgage tradeline to show on your report to ensure an approval?

Do Buying Mortgage Tradelines Help Get a Mortgage?


We get this question sometimes, though usually with auto loans. Some lenders think credit reports are like resumes (in some ways they actually are), in that you need to have a job experience to get a particular job in that sector, and you may find companies that offer mortgage tradelines for sale. These are primary tradelines, and they aren’t legal. You do not need to have a mortgage tradeline, or a legitimate mortgage, to purchase a first (or another) mortgage. So, now that’s cleared up. But…you’re here, so we’re going to assume you’re trying to find out what it takes to get a mortgage with sub-stellar credit. So, does that mean you should google mortgage companies that accept low credit scores

Not really, unless you are in some kind of rush, which most people are, but trust us, this is one time, maybe the most important time in your life, where being in a rush isn’t the best idea. So before you start looking for the best mortgage companies for low credit scores, we recommend clicking on this calculator and playing around with some numbers. 

Let’s take a 200k mortgage at 5.75%, which is approximately what you would get with a score of 580-640, monthly payment: $1,135.58

Let’s switch that to 3.75% (the best rate available right now), monthly payment: $926.23.

These are rough numbers, and rates change all the time, but even in this basic example, having an excellent credit score (760+) would mean $209/month difference.

Well, that’s not that much, right? Wrong, that’s $75,240 you’ll pay extra over the course of that loan. So if you’re googling “mortgage with 550 credit score,” stop, as the minimum across the board is 580, and you don’t want to flush 75 grand down the toilet do you? But, you are ready to look into buying a mortgage, but your credit sucks. 


How to Raise Credit Score in 30 Days


If you’ve got 30 days (or hopefully 45-60 days or longer), we can likely get you into a position where you can get approvals. But just getting approvals shouldn’t be your goal. Your goal should be to get the best possible rate so you can save money through the course of that mortgage loan. 

In 30 days, you most certainly can get your scores up by adding tradelines, but removing the negatives also needs to happen if you want the best rates, and that may take slightly longer. And, lastly, for the question we sometimes get. Does having a mortgage help your credit score? A mortgage, ultimately, is just another tradeline. It has no more weight than any other installment loan (student, auto, etc), but, as some smart financial writers have said, most things you buy are liabilities, meaning they lose money over time (like cars), but a home or condo purchase is an asset, as it accrues value, and buying a mortgage is still the smartest thing to do with your money. 

If you are looking to buy tradelines then stop your search here. We offer Seasoned Tradelines at lower pricing than any of our competition.