To address insufficient transaction history for home loan approval, borrowers should first establish or strengthen their credit profiles. This can be achieved by securing a credit card, becoming an authorized user on someone else’s account, or paying down existing credit balances to reduce utilization. Providing alternative documentation, such as pay stubs, tax returns, or asset statements, may also help offset the lack of transaction history. Lenders may accept these measures if they demonstrate stable income and financial responsibility.

Insufficient transaction history can hinder loan approval because lenders rely on credit reports to assess repayment risk. A thin credit file often results in lower credit scores and higher perceived risk, leading to stricter approval criteria or higher interest rates. According to the Consumer Financial Protection Bureau (CFPB), approximately 20% of U.S. consumers have “thin” credit files, defined as having limited or no credit accounts. For example, the Federal Reserve’s 2022 Survey of Consumer Finances found that 35% of borrowers with thin files were denied mortgages or received less favorable terms compared to those with comprehensive credit histories. Secured credit cards and authorized user status are effective because they rapidly build positive payment history, which can improve credit scores by up to 100 points within a year, as noted by Experian. Paying down credit utilization to below 30% of limits is also critical, as this factor accounts for 30% of a FICO score. Alternative documentation, such as proof of consistent income or savings, can compensate for gaps in credit data, particularly for self-employed individuals or those new to the U.S. market. Lenders like Fannie Mae and Freddie Mac now accept alternative credit models that incorporate non-traditional data, further expanding approval pathways. Ultimately, addressing transaction history gaps requires proactive credit building and leveraging alternative financial evidence to demonstrate reliability.