Expert Advice on Mortgages:
Credit Ratings

When mortgage lenders talk about "A-B-C-D" credit, they are referring to credit ratings.  Although the definitions may vary, these general guidelines are used as mortgage brokers and lenders compete for your business.

A+ to A-

The best credit rating - you qualify for the best rates available! FICO scores of 620 and up with no late payments on mortgages, up to one payment 30 days late on revolving credit. No bankruptcy within past 2 to 10 years. Maximum debt ratio is 36 to 40%.  Maximum loan-to-value ratio is 95 to 100%.

B+ to B-

Good credit, FICO scores of 581 to 619. Allows for two or three late mortgage payments and two to four late payments on revolving or installment credit, if less than 30 days late.  Cannot have any payments 60 days late or more. For prior bankruptcies, expect 2 to 4 years since bankruptcy discharge. Maximum debt ratio averages 45 to 50%.  Maximum loan-to-value ratio is 90 to95%. Expect to pay interest rates 1-2% higher than current market rate.

C+ to C-

Fair credit, FICO scores of 551 to 580. Three to four late mortgage payments, 30 days or less may be allowed. Four to six late payments, 30 days ore less; two to four late payments, 60 days ore less on installment or revolving credit. For prior bankruptcies, expect 1 to 2 years since bankruptcy discharge. Maximum debt ratio of 55%.  Maximum loan-to-value ratio of 80 to 90%. Expect to pay interest rates 3-4% higher than current market.

D+ to D-

Poor credit, FICO scores of 550 and lower. Two to six late mortgage payments, 30 days or less may be allowed.  One to two payments 60 days late or less on installment or revolving credit, perhaps an isolated late payment of 90 days. Current bankruptcy or foreclosure may be allowed with all unpaid judgments to be paid with loan proceeds. Must have stable employment. Maximum debt ratio averages 60%.  Maximum loan-to-value of 70 to 80%. Expect to pay high interest rates (12 to14%), but realize that you may be able to refinance after one year of "on-time" mortgage payments.

Check your credit report for errors (once a year!) - it is estimated that 50% of all credit reports contain errors significant enough for an individual to be denied a loan!

You might find it almost impossible to compare true costs of loans you may be offered -- but your mortgage broker will be able to advise you about the best mortgage rates and loan programs available for your financial needs.

Contact the premier mortgage brokers who advertise in the LoanStar.net Mortgage Directory.  You will discover experienced, knowledgeable professionals who truly believe that every borrower deserves personal attention and the highest level of customer service.

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