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I Have To Use My Credit Cards?

There’s something that is important when getting a jumbo loan that you need to know. And that is something called minimum tradeline requirements.

What’s a tradeline?

A tradeline is one piece of credit. So one credit card is a tradeline. One car loan as a tradeline.

I found out years ago that there are many lenders that on a jumbo loan require you to have three pieces of credit, or three minimum tradelines that are current and active. And, of course, paid on time.

Why is this a problem?

I’ve occasionally had people where maybe they only use one credit card. And they have no car loan, it’s paid off, or they paid cash for it. They have no mortgage, they’re a renter, but they’d like to buy something. No student loans, they just have that one credit card. That could potentially be a problem in getting a jumbo mortgage. Because lenders figure if you’ve got at least three pieces of credit and a high credit score, then the credit score is more justified and supported. Because there’s at least some minimum level of activity that got you that credit score.

If there’s one piece of credit that you have active and yes, you’ve paid it on time, that’s great. They just don’t feel that’s enough to earn your high credit score. While you might debate that, “Hey, I’m a conservative debt user. I only use this one credit card. I’ve paid cash for my car.” And all this other stuff. “I don’t understand why this is penalizing me.”

It’s just the way jumbo loans are. They need to see more pieces of credit that you’ve handled to justify giving you a big mortgage, like a jumbo loan.

What should I do? Minimum tradeline requirements

So keep that in mind. And if you only use one credit card and you think you might want to get a jumbo mortgage, you should use some other cards that you have. And start to get them active, even if you use them nominally. Go out and buy a bag of groceries and then you pay that balance off. And then you do something else the next month and you just use it sparingly. Do that with a couple other credit cards and try and keep three pieces of credit active for a while before you buy a house and up to the point that you’re buying a house. And then afterwards, maybe you can go back to your old ways of just using one credit card. Let me know if you have any question.

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