Thin credit and credit score policy
A "thin credit" file exists when the primary occupying borrower (the individual with highest percentage of income in the transaction) has a satisfactory credit score, however, they do not meet the following criteria:
- At least three open tradelines with a 12-month satisfactory history, including
- at least one open tradeline with a 24-month satisfactory history
"Authorized User" tradelines do not count towards the tradeline requirement
An application with thin credit can be approved under the following circumstances:
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If the borrower can document a 12-month satisfactory housing history (mortgage or rent), no further documentation is required. The 12 month housing history must be documented with canceled checks, bank statements, or money order receipts. A VOR or landlord reference letter cannot be used to satisfy this condition.
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If the borrower cannot document a 12-month satisfactory housing history, then the documentation specified in FHA Mortgagee Letter 2008-11 must be obtained. Specifically, at least three references must be provided from "Group II" (the Group II list is provided at the end of this announcement).