Did you know that
75% of all mortgage lenders use a three-digit credit score to determine your
loan eligibility? This score is based on the information contained in your
credit report. And the interest rate you will be charged is based on your credit
score, so raising your credit score as little as 15 points could result in a
lower interest rate and thousands in savings. You can save anywhere from a few
hundred dollars in credit card interest charges, thousands of dollars on your
next car loan, and tens of thousands of dollars on a mortgage loan simply by
improving your credit score as much as
possible.
The information
below offers general guidelines as to what your credit score might be. Each
lender sets its own guidelines for approving loans and issuing credit. For this
reason, the information below offers only general guidelines. Your
debt-to-income ratio also plays a role in determining whether or not you will be
issued credit. Some lenders require a debt-to-income ratio that may be higher
or lower than those stated below. See bottom of this page to find out how to
calculate your debt-to-income ratio.
The information
below is based on the FICO scoring model which ranges from
about 375 to 900. Other lenders might use their own in-house scoring systems or
another scoring model. General rules to determine your credit score and
creditworthiness are as follows:
A rating [Credit score 660
or higher] -- You can easily obtain financing at the best rate; you can get
approved for a credit card online in a few seconds. Note that a score above 700
means you have extremely good credit.
Typical debt- to-
income ratio: Below
35%
Mortgage: You have not
been late with a payment in the last 24 months
Installment
loan: You have been
30 days late making payments 0 or 1 time within the last 12 to 24
months
Revolving
credit: You have been 30
or 60 days late with a payment 0 or 1 time in the last 12 to 24
months
Additional
requirements: Good/excellent
credit during the last 2 to 5 years; no bankruptcy within the last 2 to 10
years
B
rating [Minimum credit
score 620] You can get approved, but not at lowest rate. You can get credit
cards and such, but at a higher rate than someone with an A rating.
Typical
debt-to-income ratio: Around
50%
Mortgage: You have been
30 days late with a payment 2 or 3 times in the last 12 months
Installment
Loan: You have been
30 days late with a payment 2 to 4 times during the last 12 months
Revolving
credit: You have been
30 days late with a payment 0 to 2 times in the last 12 months
Additional
requirements: You have no
60-day late mortgage payments; if filed bankruptcy, it must be discharged 2 to 4
years ago
C
rating [Minimum credit
score 580] Have trouble getting approved. Very high rates.
The lender might
ask you to get someone to co-sign for you.
Typical
debt-to-income ratio: 55% or
higher
Mortgage: You have been
30 days late with a payment 3 or 4 times in the last 12 months
Installment
Loan: You have been
30 days late with a payment 4 to 6 times during the last 12 months
Revolving
credit: You have been
60 days late with a payment 2 to 4 times in the last 12 months
Additional
requirements: If you filed
bankruptcy, it was discharged 1 or 2 years ago
D
rating [Minimum credit
score 550] Serious trouble getting approved. Co-signor required.
Typical
debt-to-income ratio: Around
60%
Mortgage: You have been
30 days late with a payment 2 to 6 times in the last 12 months; and 60 days late
1 to 2 times during the last 12 months
Installment
Loan: You have a few
90 and 120 day late payments during the last 12 months
Revolving
credit: You have a few
90 and 120 day late payments during the last 12 months
Additional
requirements: If you filed
bankruptcy, was discharged within last 12 months
E
rating [Credit score
under 550] Unlikely to be approved.
Typical
debt-to-income ratio: Around
65%
Mortgage: You have a
pattern of 20, 60, 90 and/or 120 day late payments
Installment
Loan: You have a
pattern of 20, 60, 90 and/or 120 day late payments
Revolving
credit: You have a
pattern of 20, 60, 90 and/or 120 day late payments
Additional
requirements: You may have a
current bankruptcy or foreclosure | 
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