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 B, C & D Credit Grades
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Quality Level | Credit Score | Debt Ratio | Max LTV Ratio | History for Credit Type | # of times | # of days | Within last | Typical Additional Requirements |
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. |
B+ to B- | 620 | 50 | 75 – 85 | Mortgage Installment/Revolving | 2 – 3 2 – 4 0 – 2 |
30 30 30 |
12 mo 12 mo 12 mo |
No 60-day mortgage lates. 24 – 48 mos since bankrupt discharge. Higher number of rolling rates may be allowed. |
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” rates allowable. |
D+ to D- | 550 | 60 | 65 – 70 | Mortgage Installment/Revolving | 2 – 6 1 – 2 |
60 60 |
12 mo 12 mo |
Bankruptcy discharge within last 12 months. Judgements to be paid w/ loan proceeds. Not in foreclosure. |
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E | 520- | 65 | 50-65 | Mortgage Installment/Revolving | Poor payment record with a pattern of 30, 60, and 90+ rates | 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.