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Credit Grades
Mortgage companies often grade your loan based on certain credit-related
items such as payment history, amount of debt payments, bankruptcies, equity
position, and your credit
score.
Below is a guide to help you estimate your credit grade. This is only a guide
as many companies have exceptions that may result in more strict or more lenient
guidelines.
A General Guide to Credit
Grades
| Quality Level |
Credit Score |
Debt Ratio |
Max LTV Ratio |
History for Credit Type |
Delinquencies: |
Typical Additional Requirements |
| |
# of times |
# of days |
Within last |
|
| A+ to A- |
670+ 660 |
28/
38 |
To 95% |
Mortgage
Installment/
Revolving |
0
0 - 1
0 - 1 |
-
30
60 |
24 mo
12 to 24 months |
Good/excellent credit during last 2 to 5 years. No
bankruptcy within the last 2 to 10 years. |
| C+ to C- |
580 |
55 |
75 |
Mortgage
Installment/
Revolving |
3 - 4
0 - 2
4 - 6
2 - 4 |
30
60
30
60 |
12 mo
12 mo
12 mo
12 mo |
12 - 24 mos since bankrupt discharge. High "rolling"
lates allowable. |
| E |
520- |
65 |
50-65 |
Mortgage
Installment/
Revolving |
Poor payment record with a pattern of 30, 60,
and 90+ lates |
Possible current bankruptcy, foreclosure Stable current
employment |
The figures shown here are
estimates. When trying to figure your credit grade, keep in mind the following
principles:
- Other Things Being Equal
When your have bad credit, all of the other
aspects of the loan need to be in order. Equity, stability, income,
documentation and assets play a larger role in the approval decision.
- Worst Case Scenario
When determining your grade, various combinations are
allowed, but the worst case will push your grade to a lower credit guide. Late
mortgage payments and bankruptcies are
the most important.
- Going Once, Going Twice
Credit patterns are very important. A high number
of recent inquiries and more than a few outstanding loans may signal a problem.
A "willingness to pay" is important, thus late payments in the same time period
is better than random late payments as they signal an effort to pay even after
falling behind.
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