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To most people, good or bad credit is simply a history of paying or repaying
their obligations in full and on time but to a lender, good credit means a
FICO score above 720.
Banks, credit card issuers, all lenders, as well as utility companies and
many other businesses report your payment history to one of several credit
bureaus. The leading credit bureaus are Equifax, Experian (formerly TRW),
and Trans-Union. The credit bureaus sell reports about the past credit performance
of both individuals and businesses to authorized agencies, usually lenders.
Credit bureaus use statistical models that consider various credit factors to
determine credit ratings. These models generate a number, commonly called a
credit score or FICO score, which provides lenders with a reliable starting
point for making decisions about lending money.
What does your credit score mean? Credit scores range from about 475 to 850,
higher is better. Anything above approximately 720 is considered good credit.
Borrowers with good credit are able to get the best financing rates and terms
that are currently available to the general public, "prime rates." If your score
is below 620, you will usually pay a higher rate for your mortgage, and your
credit is considered "sub prime."
Lenders generally classify borrowers into the categories shown below, based
on their credit scores. Remember: these categories are guidelines, not fixed
numbers. The categories vary slightly from lender to lender, for example a credit
score of 620 could be a "B" with one lender and a "C" with a another lender. Also,
the data underlying the credit scores is constantly being updated so the scores
can vary from day to day. The lower your score, the bigger a risk you appear to
be to a lender, so your financing choices become more expensive and restricted.
Each lender uses their own underwriting guidelines. In an A- or an E lending
scenario, dozens of factors are considered. Your best assurance of getting
the best terms for your loan is to shop among several lenders.
| Credit Rating |
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Credit Score |
| A+ |
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740 |
| A- |
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720 |
| B |
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680 |
| C |
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620 |
| D |
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600 |
| E |
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560 |
How do you determine your credit score? Click Request A Quote and have a Bad
Credit Loan Mortgage Banker contact you and receive a COMPLIMENTARY Tri-Merge
copy of your report! Request A Quote Now!
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