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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. |
| 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 lates 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" lates 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. |
| Poor payment record with limited 90 day, isolated 120 day | ||||||||
| 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.
