How I Bought a House With No Credit Score
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Listen, I know you're worried. You're worried about buying a house. You're worried about inflation. You're worried about season three of Ted Lasso. Will it redeem itself? Is there going to be another weird beard episode? We just don't know yet. I'm sick of it. And unless you've been living under a rock, because let's be honest, it might be the only place you feel like you can afford in today's market.

You know that buying a home has felt crazy the last few years. And here's a little insight into why. Supply is way down, demand is way up. It's that simple. There are way more eligible homebuyers today wanting to buy homes than there were in 08, for example. And this has caused home prices to skyrocket over the last few years. In fact, it feels like the only thing not skyrocketing is the price of the Costco hot dog.

And if you're wondering how they've kept that price at $1.50 for decades, here's a headline for you. Costco co-founder told CEO, I will kill you following the suggestion of a hot dog combo price hike. Don't even suggest it. He's not going to have it. We all know houses aren't hot dogs. I don't think I'm the first one to tell you that. Maybe I am. It's a weird thing to say out loud. But we can't control the price of houses like we can hot dogs. But the one thing we can control is hitting that like button.

Go on. Yeah, just hover over it while you're watching. It's not going to hurt anyone. Hit the like button and hit the subscribe button while you're at it. You'll be fine. You'll be back with your family very soon. Now, if buying a home already feels difficult enough, why would I want to add the pressure of doing it without a credit score? And isn't that impossible anyway? I mean, people are in disbelief. And some of those people were Scott and Anita from Fox 32 Chicago.

George Camel, I want to thank you for coming on the show this morning. We have to do a whole other segment on how you bought a house without a credit score. Because Scott and I both looked at each other and said, huh?

But that's just two people's opinions. And it got me thinking, how many other people out there don't know that you can buy a house without a credit score? What if I told you you could buy a house without having any credit score? Would you believe me? I wish. He wishes. No. No, unfortunately not. If it was a poor credit rating, probably not. What if you had none? No history? I don't know. I think it would have, it certainly would have made the process more complicated. Yeah.

- I think we're all obsessed with a number, but. - Thank you. Have you heard about the manual underwriting process or a no score loan? - I have not. - If you didn't have any credit cards. - You had no credit, no credit history. - It would be pretty tough to prove to a lender that you are a reliable borrower, right? - You don't think you could prove it? I feel like you could prove it to him. Can I make your wish come true today? - Yeah, sure. - They'll do some special effects there.

So you can buy a house without a credit score. Really? It's a real thing. And I've done it myself. Here's the deal. I just didn't want to have a relationship with debt anymore. Which, by the way, is what your credit score is all about. It's made up of debt history, your debt amount, how long you've been in debt, any new debt you've acquired, and your debt mix. It's all about debt. It has nothing to do with how much money you have or even if you're good with money. You could have a million dollars or even a billion dollars, but it won't change your credit score

one bit because your FICO score only tracks your relationship to debt. How much of a good boy you've been when it comes to borrowing money. So several years ago, I decided I'm done with this. I don't care about the credit score anymore because I'm done with debt. Now, I'm not saying I wanted a low score. I'm saying I wanted

no score. There's a huge difference. I wanted to live in a world where I was in control of my money, where I saved up for things and paid for them in cash, and I depended on me, not giant banks, to fund my life. I wanted my money freed up to work for me, to be able to save and invest for my future, and to be able to give generously. So when it came to buying a house, I didn't have a credit score to get approved for a mortgage, which actually, turns out, isn't a big deal at all. I just went through a process called manual underwriting to get a no score loan. So what is manual underwriting? Well,

automated underwriting is when the robots and the computers decide if we're going to get approved for a mortgage based on all of our credit history. Manual underwriting means a real person looks at your real financial situation and reviews it to approve you for a mortgage. Just think of it as a hands-on investigation into your ability to repay debt, where that real person looks at things like your W-2, your tax returns, your rent history, plus one or more regular monthly expenses, which counts as an alternative to

trade line, things like utility payment, insurance payments, payments on a gym membership. And as you can tell, I do that. I, yeah, I fill out these shirts like nobody else.

That's lying. No better person. Now, this does take a little bit longer, but some things are worth waiting for, like a citrus old-fashioned donut with a lemon-lime-orange-grapefruit glaze at Blackbird Donuts in Boston. Now, aside from all the proof of payments and documents, I needed a solid down payment. 10% is the minimum if you want a good interest rate on these loans. 20% is ideal to get the best interest rate and to avoid private mortgage insurance. So we put down more than 20% so that we could pay this thing off early.

And here's the deal. The bigger the down payment, the less risky the loan is to the lender. Oh.

- Oh, that's, yeah, it makes sense. - So even if you don't have more than 20%, you can still be approved for a no score loan. Now on top of having that down payment, you wanna go with a 15 year fixed rate conventional loan. Now this is very controversial in today's world. Most people will tell you to do the 30 because the payment's lower, but here's the deal. We're trying to get out of debt, not stay in it. And also the 15 year loan is gonna give you the best interest rate and save you tens of thousands if not

six figures in interest payments. Keep the change, you filthy animal. And here's another rule of thumb you want to use when buying a house. You don't want that mortgage payment to be more than a quarter of your take-home pay. That includes your principal, the interest, your taxes, and your homeowner's insurance. If your payment is way more than a quarter, that's what we call house poor.

What's you wearing? You look poor. - You don't have money to do other things in life, like invest and go on vacation and save for your kid's college and retire early. That's why you want to keep that payment nice and low. Now there are plenty of other things in life that take your money, like owning not one, but two French bulldogs who are pretty much bred to die.

I mean, seriously, why do they have so many issues? The breathing. Why are they eating dryer sheets? The vet bills. And we're not gonna talk about wiping the butts. We're not gonna go... Now, before you jump into the YouTube comment section going, "This guy's an idiot. The interest rate's gonna get jacked up." I'm about to jack you up, broseph. We are here to pop!

Here's the deal. I actually sat with a mortgage loan officer at Churchill Mortgage, and we ran the numbers on these loan estimates. If you do what I said, a 15-year fixed rate loan with at least 10% down, you would get the same great interest rate as someone with excellent credit.

Meaning if you follow my advice here, you won't have to worry about getting a good interest rate. Now I will say, getting a mortgage gave me another credit score. Again, but who cares? It was never just about having a zero credit score. It's about what the zero score represented. My line in the sand where I said, I'm done playing the games of a toxic money culture. I'm done playing this. You can buck the trends and live life on your terms. You can ditch debt. You can live life without a credit score.

You can buy a house no matter how bonkers the market looks. You can pay off that home early and become a millionaire someday. But it all starts with believing in your own ability to do it. Now, if you want to learn more about this topic, I'm going to drop a couple of links below. And one of them has a little more detail on how to buy a home with zero credit score. But before you do that, don't click. First, hit the like button and hit subscribe so you can get more content like this. Thanks for watching, guys. We'll see you on the next one.