Money Minute: Can I get by without a credit file? Yahoo Finance Wednesday, June 3, 2015
Roughly 36 million adults in the U.S. are considered “credit invisible” — meaning they either have no credit history at all or their credit files are so thin that they are virtually unscorable.
You can get by without credit, but it’s not easy — or cheap.
What about a mortgage?
Without a credit history, you better have a lot of cash on hand if you're shopping for a new home. To qualify for an FHA loan. you are required to have at least one month’s worth of income saved up, after subtracting whatever your down payment and closing costs are.
On top of that, you can’t have missed any rent payments, cellphone bills or other utility charges. In fact, you can be disqualified for having any account more than 30 days past due (with the exception of unpaid medical debt). And even if you’re approved for an FHA loan, you’ve still got to convince a bank or mortgage servicer to give you the time of day. Community banks and credit unions may be your best bet on that front, since they are can be more flexible about what factors they consider in reviewing loan candidates. For example, they may pass over your thin
credit file if you show a solid job history and have sufficient funds in the bank. You stand an even better chance of getting approved if you can promise a hefty downpayment (20% or more).
Many people don't realize that cellphone companies typically run credit checks on new customers before approving them for a phone plan. If you don't have a credit history for them to check, you can still sign up for a plan and a one- or two-year contract, but it will mean putting more money upfront, typically in the form of a security deposit (most carrier return your deposit after 12 months so long as you don't miss any payments).
You can get a prepaid phone, but that also means paying more money ahead of time. Or, you can mooch off of someone else — just ask them to let you co-sign for a phone contract or add you as an authorized user to their plan.
Unlike mortgage financing and a phone plan, getting cable without credit has never been easier. Big providers like Dish and Comcast both offer prepaid cable plans. No credit check required, but you do have to put down a deposit (big surprise). HBO just rolled out its $15-a-month online streaming service. And of course, you could always just download Netflix or Hulu and call it a day.