Credit Grade
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
| 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 and don’t necessarily indicate the need to repair credit. 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.
Additional information is located on these pages:
- Bad Credit Mortgage Loan – When those with bad credit try to get mortgage loans.
- Bad Credit Mortgage Issues – Why folks with bad credit have trouble getting a good mortgage interest rate.
- Your Credit Report – Understand how a mortgage company company views your credit information.
