Do You Need More Than One Trade Line?

March 23, 2009, Reviewed February 4, 2009, April 7, 2011

"My husband and I went to a mortgage broker and he pulled our credit which is really good, but told us we both need to have 3 trade lines in order to be approved for a mortgage? So he told me I have to go out and charge something on a credit card I haven’t used in a long time to get another trade line on my credit; is this true?"

Yes, a broker has no reason to complicate a transaction, and perhaps lose it. The lender has imposed this requirement which the broker is obliged to implement.

During the go-go years, lenders mainly relied on credit scores, which require only that the borrower’s trade lines are sufficient to produce a score. In today’s market, however, increasing numbers of lenders have gone back to the traditional credit history approach, in which the lender assesses all the data in the borrower’s credit history in order to make a judgment about creditworthiness. Based on rules established by Fannie Mae and Freddie Mac, which buy most of the mortgages originated today that are not FHA-insured, the borrower must have at least three trade lines, each of which has been used within the last year.

I am not sure that this rule makes a lot of sense. I doubt that a borrower is more creditworthy because she divides her credit transactions across three cards rather than one. But that is the way it is.

Want to shop for a mortgage on a level playing field?

Why Shop for a Mortgage with the Professor?

  1. Receive His Help in Finding the Type of Mortgage That Best Meets Your Needs
  2. Shop Prices Posted Directly by His Certified Lenders
  3. Shop Prices Fully Adjusted to Your Deal
  4. Shop Prices That Are Always Current
  5. Get Him as Your Ombudsman Just in Case

Read More About the Support and Protections Listed Above

Sign up with your email address to receive new article notifications