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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 | To 55% | To 107% | 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 | 55 | 95 - 100 | 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 months since bankrupt discharge. Higher number of rolling lates may be allowed. | | C+ to C- | 580 | 55 | 100 | 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 months since bankrupt discharge. High "rolling" lates allowable. | | D+ to D- | 550 | 50 | 85 - 95 | Mortgage
Installment/
Revolving | 2 - 6
1 - 2 | 60
60 | 12 mo
12 mo | Bankruptcy discharge within last 12 months. Judgments to be paid w/ loan proceeds. Not in foreclosure. | | E | 520- | 50 | 80-90 | 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.
Contact Ben Borden at Virginia Mortgage Bankers, LLC and I will give you a tri-merge credit report with your credit score for free! If you have questions just ask! You may
contact us at Virginia Mortgage Bankers, LLC for your credit grade questions by email, phone or by appointment in our office. Start now by filling out our secure online application for mortgage loans! Call us at (804) 282-8808, Monday through Friday from 9 a.m. to 5 p.m. Eastern time!
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