Surviving Without a Credit Score

Earlier this week, we explored some strategies for building your credit when it’s hit rock bottom.

Shortly after, I received an email from a reader, Ron V., who said he has a better idea:

Credit scores are just a measure of how indebted to the system [you are]. Better to go for a 0 credit score, pay everything off, pay cash, debit card, no interest payments at all. 

Save the difference and live better, if you want a mortgage you can get it manually underwritten by a real mortgage professional but only on 15yr note with less than 25% of income (you should be able to pay it off in 7yrs). 

Get out of the Trap and live happily. — Ron V.

The strategy Ron recommends may not be for everyone. But he is right. With a little effort and determination, it’s possible to live credit free and get out from under the thumb of the corrupt system.

If that’s your plan, here are some strategies:

Sidestep the Agency

Rental agencies tend to be sticklers for the rules. You’ll have a hard time getting one of their lackeys to budge on “company policy.”

But individual owners tend to be a lot more accommodating. Depending on the person, you can convince them to waive any extra fees by simply telling them you’ve never been in debt and you pay everything in cash.

If all else fails, you can usually get an apartment by paying a larger than normal security deposit or a few extra months up front. A rental agency will waive these fees if you get a co-signer on your lease, but this may not be an option for everyone.

Not ideal. But very possible.

If you’re moving apartments make sure to get a referral from your previous landlord.

Ditch the Robot

If you want to take out a mortgage without a credit score, I’ve got two words for you.

Down Payment.

The bigger your down payment the more likely your mortgage will be approved (and the less time it will take to pay off).

Along with your down payment, you’ll need to show proof of your earnings, as well as a spotless history of rental and utility payments.

As Ron mentioned above, you’re going to want to lookfor a mortgage company that uses a process called manual underwriting, also known as “non-traditional credit” or “without a credit score” lending.

With manual underwriting, your mortgage application will be evaluated by a real  person who is assigned to your case, rather than an automatic system.

This is obviously more time consuming, but it allows for a little more finesse when it comes to decision making.

That human touch can make all the difference. Even though you might not hit the specific set of requirements a robot might use to approve a mortgage, it could be obvious to a human underwriter that you’re a responsible consumer.

What about you? Have you had any experiences with living credit free? What were the biggest problems and how did you overcome them? Email me and tell me all about it.

All the best,

Owen Sullivan

Owen Sullivan
Editor, Money & Crisis

P.S. Need some extra cash for that down payment? Check out James Altucher’s powerful income-building strategy. This simple technique can be used to yank $3,000 out of the stock market every month. Click here and he’ll show you how to do it yourself. Don’t delay. You only have until midnight Sunday to take him up on his offer.

Chris Campbell

Written By Owen Sullivan

Owen Sullivan isn’t a millionaire or one of the Wall Street elite. He was just one of the many folks who was hit hard when the housing bubble burst… and decided he was never going to let that happen again. Since then, he’s worked with industry experts to develop strategies and techniques to bulletproof his finances — and yours — against the next crisis. His methods don’t require years of financial experience. These are simple strategies that anyone can follow. After all, financial prepping shouldn’t be reserved for a select few.