Many older Americans tend to avoid using credit, with the exception of the mortgage they have been paying on for many years. While this can be a safer path than using credit more frequently, it also can be the cause for denial on some major non-mortgage credit applications.
|“No Recent Non-Mortgage Balance Information”||Credit Score Risk Factor Codes|
Specifically, non-mortgage credit can include other installment loan accounts, such as a car loan or a personal loan with the bank. However, revolving credit tends to play a bigger role in building credit scores since they are more dynamic than installment credit.
When applying for a major account such as an unsecured line of credit, lenders want to see that you have a recent track record of managing other revolving accounts. Even use of a store card can establish this recent history, although a major credit card provides greater evidence of creditworthiness.
It is unlikely that you would see this error code if you are applying for a minor account. Usually, a lender who balks at your application is concerned that the risk outweighs the reward. They would prefer that you have shown activity on other accounts besides just your mortgage.
Activity within the past year will probably keep this error code from sprouting up. It is best though to show activity within the last 3-6 months, since this will expand your recent credit history. A lack of recent activity on major credit cards and on other revolving accounts will lower your score.
Many applicants who see this code when being denied credit make the mistake of opening other credit accounts. If you open several accounts, it can have the unintended effect of lowering your credit scores. It can take 2 years or more for newly opened accounts to age sufficiently that they are favorably factored into your scores.
Instead, you should focus on non-mortgage accounts that you already have open. A dormant credit card can be used to bring it back into your recent credit history. A store card could be used for a minor purchase. Even an idle line of credit could be tapped to generate recent activity. Of course, any debt that you take on should be immediately repaid to avoid finance charges, or worse, forgotten payments!
If you have no other open accounts, then you might consider opening one. Make sure that you have a use for the account and that it has desirable terms. Most importantly, make sure that you can meet all payment obligations without fail. Once you have maintained that account for at least 6 months, you will be in position to wipe out this risk factor.
No recent non-mortgage balance information is credit bureau risk score reason 17. It is code G4 in NextGen scoring products. For more information on credit scoring, see the complete list of credit score factors.
Long is a graduate of the University of North Carolina at Chapel Hill with a B.A. in Industrial Relations. He subsequently received his Certificate in Nonprofit Management from Duke University. His Certificate in Financial Planning was issued by Florida State University.
Long has achieved the Accredited Credit Counselor and Accredited Financial Counselor certifications through the Association for Financial Counseling, Planning and Education. Long originally achieved the Certified Credit Counselor designation through the National Institute for Financial Education.
In addition to years of nonprofit leadership, Long has been an innovator in the field of volunteer tax return preparation programs. He assists volunteer associations and nonprofit organizations who seek to integrate credit counseling and asset-building programs with free personal income tax preparation. His approach to using free credit reports as both an incentive and a screening tool for placement into asset-building programs has been shared with members of the National Community Tax Coalition, the EITC-Carolinas Initiative of MDC, Inc. and nonprofit groups across the Carolinas.
Long assists members of our armed forces in the Carolinas, Iowa, Rhode Island, Georgia and Germany with financial readiness. Please support our Soldiers, Marines, Airmen and Sailors!
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