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Four Credit Rankings
A standard ranking system is used by the loan industry to rate a person's credit
so that people who have "credit problems" or what they consider to be
"bad credit" can be easily avoided. This system makes it easier for
lenders to determine whom they will and will not work with as it is based on a
standard scale. It frequently makes your search for a loan more difficult, unfortunately,
since many mortgage lenders look only at these rankings and will not work with
customers who have less than an "A- Credit."
A- Minus Credit
A person with this credit rating has had very few or no credit problems within
the last two years, perhaps one or two 30-day late payments, and no record of
collections.
B Credit
This rating allows a few late payments within the last 18 months and is where
most credit reports fall. Up to four 30-day late payments (or up to two 60-day
late payments) are allowed on revolving and installment debt. One 90-day late
payment is allowed within the last 12 months if the late payment is an isolated
incident.
C Credit
This rating is accorded to someone who has a lot of late payments in the 30- to
60-day range in the past few years, a late mortgage payment that is in the 60-
or 90-day range, or a bankruptcy or foreclosure that has been discharged or settled
within the last 12 months.
D Credit
Someone with this credit rating has open collections, charge-offs, notices of
defaults, etc., with multiple 30-, 60-, 90-day or more late payments.
The maximum loan available for the credit-impaired borrower used to be 80% of
the value of the property. |
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