You know what it is. That's right. It's time to talk money with your money nerd and financial coach. Now, tighten those purse strings and open those ears. It's the money talk with Tiff podcast. Hey, everyone. I am so excited because I have one of my mentors and someone, a dear friend, Steve Stewart, on the line, and he is here to talk to us about how to qualify for a traditional mortgage without the traditional credit score underwriting. So, hey, Steve, how are you
today? Hey, Tiff, thanks for having me here. It's a pleasure. Yes. And this topic, like, I feel like so many people would get so much use out of it, so let's just dive right in. So, first and foremost, when we're talking about a traditional mortgage, what does that even mean? Traditional mortgage in the american states that we need to clarify, as far as I understand, is usually based on a couple of measurements, but the most important one is
the most efficient one. It's a traditional credit score. People may hear about the FICO score, and that is, it's made up of five different measurement tools, but a lot of it is based on debt and having debt products that you use, like credit cards or if you've got car loans, any type of payment history on debt products. And it's the most efficient way for banks to do it because they can say, oh, okay, we can see you've had debts and you've paid them off. So, okay, you can get this
mortgage, which is a debt, and probably pay it off. So that's where a traditional mortgage comes into play. Now, there's other types of mortgages, too people can qualify for, such as FHA loans and things like that. And there's different qualifications or different not limitations, but less restriction on those as well. But we're talking here about a traditional FICO score type of mortgage that my wife and I qualified for.
Even though I'm the only one that's working, I'm the only one bringing an income for the past almost three years now self employed, which makes it even more difficult for traditional mortgages and not making more than six figures, actually not even making six figures a year yet. So, yeah, we need all this juice. But it's funny that you mention that you need debt to have a credit, because I thought that was
so weird. Like, when I first started on my credit journey, I was like, so I have to have debt in order to get credit? Yep. Yep, that's the case. In fact, the five pieces, the FICO score, the biggest one is payment history. 35%. The payment history is usually, and we'll talk a little bit about how this is changing nowadays. But for the past, you know, 40 years, I think it's been 35% of that is payment history. And it's usually on credit cards, car loans, student loans,
even medical debt, and of course, mortgages. But then the next biggest one is 30%, which is amount owed. Well, if you're like me and you have no debt, at least up until we qualified for this mortgage, you know, I didn't have any debt. In fact, to give people a little background, I cut up my credit cards in 2007. We had no consumer debt since 2008. No, 2007. So
that was a long period of time where I had no consumer debt. And the mortgage that we did have at the time, we paid that off in December 2015, and by 2017, I had zero credit score because there was nothing for FICO to measure me against. I had no payment history on debts. I had no amounts owed on debts because I had no debts. I wasn't taking out any new credit, which is 10% of the FICO score. 10% of another 10% of the FICO score is credit mix.
So you've got your credit card type loans, you've got your car loans, you got your mortgages or different types of loans. I didn't have those. And then the length of credit history is the other 15% of that total FICO score measurement. And of course, I didn't have one anymore because we had paid everything off and the mortgage was even gone. So we're talking from 2017 to this year is when you closed, right? Yes. 24. Yeah. So, 2017 to 20240, credit
score, nothing on your credit. So how did you do this? Yeah, normally people would say, oh, you'd have to do something like manual underwriting, which is a lengthy and expensive process for a bank, because now they've got to look into things that are more than just, you know, this three digit number that everybody's praising and everybody's working towards. So what I had done was kind of circumvent the system. And what's amazing is that
there's tools. There's. There's actually one tool I had been using for a few years, and it's been around for a decade, but nobody hears about it because everybody's talking about the traditional FICO score. And then there's another product out in the market now that people probably have heard of, but maybe they just don't understand what it is. So let me tell you what those two products are. One of them is called ecredible.
Ecredible is a third party system that you can sign up for and you basically let them report your utility bills, your insurance payments, you know, anything you want. They can then track and report to the credit card, to the credit companies, the three big, well, there's three big companies. We should start there. So Fico is kind of the big one that everybody hears about. But there's three major companies out there that provide credit scores besides FicO. Transunion, Experian
in Equifax. Well, this company credible will report utility bills, you know, your cell phone bill, if you're making these payments on a regular basis, and they can see that they're going to report those to Transunion, which is fantastic because then you're saying, hey, I've got a history, I've got a length of payment history, which again, is the biggest component of a traditional credit score. And I paid off every month. So that balance is paid every month and it's going to raise
your, your traditional credit score. Then there's a product from Experian called Experian Boost, which is free. And it does a very similar thing. It does it in a different way. It basically just crawls your, your bank account. So you get to tie your bank account to it, and it will then report to experian your things like cell phone bill, Internet, cable, whatever, and that
increases your Experian credit score. So I had been doing these things knowing that eventually we're going to move to this place in paradise, which nobody knows about, and it's in the middle of nowhere. It's wonderful. We're so happy here. I love the pictures, by the way. Yeah. I'll send you some. You can put in the show notes. Leading up to this, I just simply had things like our cell phone bill and our credit score or our,
what were the things? I'm trying to remember what they were very simple things, things that everybody has. And they were being reported to these credit agencies. So much so that I had a score not based on traditional stuff, but based on things like paying our cable bill and things like that. Of 373 that would be reported to Transunion, 373 is considered a good credit score then for Experian with Experience boost, my credit score according to Experian, again, based on no debt
products right now, even now. So now we've had a mortgage for a few months. So that's, that's obviously helping there. But my credit score in there has been around 750 before and after, which is considered a good credit score. So I'm going to give everybody seven words that other people will pay thousands of dollars for a how to build your credit score course, I'm going to give you seven words for free that will tell you exactly what I did here. Pay your debts and bills on time.
Boom, there you have it. That's it. If you do that. Yeah, if you do that. And then you can use these tools like I'm talking about. But you're already building up your, your history of being able to make payments. If you pay your bills and debts on time, you're going to be eligible to be proven as creditworthiness, even for a mortgage. So we don't borrow money for anything except for this one time where we, we now have
a mortgage. And this mortgage wasn't just a little bit of money because we didn't sell the house that we were in and take the equity to pay down this, this mortgage until about six weeks after we moved in. So I had to qualify for this ridiculously huge honking mortgage. That was scary to me. And now get it to a manageable monthly payment. But even then, I want to kill that off. But it didn't take, following the traditional advice to get that huge honking mortgage,
which I think is just amazing. I absolutely love that because I'm very debt adverse as well. And that's one thing. Even if people listen to, for instance, at Dave Ramsey or whatever, he's like, yeah, you have a zero credit score. But then people are like, okay, so how do I get stuff? And so to know that there's people out here that's actually doing this and using these different tools and resources to kind of circumvent that debt piece, I think is
phenomenal. So ecredible was one that you mentioned. And then Experian boost. So Experian boost is for Experian. And then ecredible, they report to Transunion. Is there anybody for equifax? There are some out there. And, tiff, you actually queued me in on one. I forget what it was called, but you're basically paying like five months. I think it's $5 a month. And I think they report. I don't know for sure, but you know what?
I don't care. And that's kind of the, that's kind of the point here is everybody talks about how important it is to have a credit score, that you need a credit score. I didn't have a credit score. We qualified for a huge honking mortgage by doing these simple things of paying your bills and debts on time. And I didn't have any debts. And when you don't have debts, you can do something called save money, which is where you can get a nice down payment. Now, we did have a good down payment, but
it wasn't 50% of the mortgage or anything like that. It was maybe around 20%, which is what people will recommend, ten to 20%. So you can do stuff like this without having to do all this manipulation over here of trying to keep your credit utilization and your credit cards just at the right rate. Use enough, but don't use too much and take out the right types of credit. Have a mix of credit. You don't have to mess with any of that. Just pay your bills and
debts on time and eventually pay off your debts. Don't worry about your credit score. And then if you are going to borrow money again in the future, then you can do something like this. Exactly. Exactly. I see posts all the time and I get questions all the time. And people listen to the episodes about credit scores and stuff and blog posts about credit scores all the time because people are so hyper focused on that credit score, thinking that this is the ticket, this is it,
this is what I need to do. And these are the traditional ways to do it. But here's a whole other option to play the game a whole different way. And I love it. Yep. Yep. And if you notice, when I go through the FICO score, let me go through them again. 35% is payment history, 30% is amounts owed, 15% is the length of your credit debt history. 10% is the mix of the types of debts that you have, and 10% is new credit. How much new credit you
use, none of that has to do with how much money you have. It has nothing to do with net worth, has nothing to do with your income, has nothing to do with any of that stuff. Now, a bank for a mortgage is going to look at your income. Obviously, I was self, I am self employed. I've been self employed since 2016. My wife doesn't work a traditional job. She does some freelancing work here and there, but she doesn't have a big enough income to make a big
dent into how we qualified for this mortgage. Yet we were able to do it because of all this stuff. So it's not income, it's not net worth. The FICO score is always based on debt, or you circumvent it with these other ways to show payment history, which shows your credit worthiness. That's the one thing that's been
changing over the past five to ten years. Nice and so what I hear you saying, Steve, is to be a good steward over the bills and things that you already have, and then you can use that with maybe some technology to improve your credit score without taking on debt. Bingo. I love it. I love it so much. I'm like, where were you when I was like, go first started on this process?
But that's why we're here today. So that way we can share with other people who may be going through, because honestly, y'all, like, I love what Steve is saying about the credit score. You know, we get too hyper focused on it. And really, at the end of the day, it doesn't matter. It really doesn't matter. Once you qualify, like, once you get a house or car, whatever it is you're trying to qualify for, then it just becomes a second thought. Like, I don't even
check my credit score like that anymore. Yeah, don't spend your time looking at it. Don't spend your time working on it. And here's something that a lot of your listeners are probably sitting here going, tiff, what about this? What about this? What is this? How do you go and travel without a credit card? Because I don't have a credit card. How have my wife and I traveled to fantastic destinations? We've flown, we've rented cars, hotels, all this stuff without a credit card. We use a debit card.
And people say, oh, debit card's not safe. Come on. The technology is there. We're in a world of bitcoin, okay? Now, bitcoin is a lot scarier than a debit card right now to a lot of people. The technology there to, well, first of all, the zero liability protection that everybody talks about with credit scores or credit cards. It's also applicable to debit cards, and it has been for over a decade. I can prove it. I've got the links
to the websites that show that protection. Every time that we have had a debit card compromise, which is a. It's been four times between my business debit cards and are personal. All but one time the bank has contacted us saying, hey, there's this weird transaction. Somebody tried to rent a room at the Bellagio in Vegas. Was that you? I'm like, no, I'm here. And I was in Missouri at the time. I was like, nope, that's not me. They canceled it. They refunded the money.
I got a new card in a couple days. No big deal. I'll tell you one thing, though. I've got a relative who had their credit card compromised, and she called the credit card company and said, hey, there's this fraudulent transaction on my account. You need to take care of it. They didn't stand by their zero liability policy. They said, oh, you need to contact whatever this false charge is and deal with them. So, hmm. My bank, with my debit card wants to work
with me. The credit card company that they, that she had didn't want to work with her on this. Again, I'm going to go back to all the stuff that we hear about credit or, you know, dangers of debit cards. I've challenged those findings and I find that they're not always true and there's ways around it, and it's not a lot of work to find ways around it. Exactly. And just like you, Steve, like, when I travel, I use my debit card.
Like I use my state employees credit union, because also, for me, I'm like, if I don't have it, I don't really want to go personally. So I'm like, I would rather not put stuff on credit cards personally. And I get that all the time. People are like, but what about points or what about the security of the credit card and things like that? I'm like, I haven't had an issue yet. And with the whole points workaround thing, I just travel with the same airlines and stuff, and so I just get
the points that way and then use them. So I'm like, there's ways around these things. I think with the things that we're talking about today, credit card companies made this stuff up so they could get more money. Yeah. And you know what? They were smart to do. So it's just a game I'm not going to play. Exactly. And we can bow out gracefully. So, Steve, thank you so much for dropping all of these gems. Now, if people wanted to learn more about this or more about you, how
could they find you? Gosh. Well, to learn more about this, I mean, I used to have a podcast where I talked about these things, but it's been over a decade since I retired that show. So the information may not be current, but it was, it was still applicable today. But that, that was the money plan. So's podcast, although I wouldn't recommend going back and list those. But if you do want to
connect with me, go on the socials, you'll find me. Everything I do is pretty much under the, the label Steve Stewart me because it's Stevestewart me, and I couldn't get the.com, so I just made everything Steve Stewart me. That's my socials. That's my website. That's where you'll find me, just like Tiff did. Perfect. Perfect. Thank you so much, Steve.
And I'll make sure I have all of that information in the show notes along with some links to these companies, so that way you can get started on this journey as well. Thank you so much, Steve, again. And when y'all look up Steve, you'll realize that he is the guru of podcasting. He's being very humble, but he's the guru of podcasting. So definitely look him up, definitely follow him. And thank you so much for sharing how you did
this in all these gems so it can help somebody else. Well, thanks again, Tiff. You make me blush, so keep paying attention at interest. Cool. Sounds good. Bye. Thank you for listening, joining and being a part of the Money Talk with TIFF podcast this week. You can check Tiff out every Thursday for a new money talk podcast. But if you just cant wait until next week, you can listen to previous podcast [email protected] or follow TIFF on all social media platforms at
moneytalkwitht. Until next time, spend wise by spending less than you make a word to the money wise is always sufficient.