What rating does your credit score have?

November 14, 2006 | Credit | 59 comments

Mortgage programs are categorized by credit score (among many other things) and the rate you are quoted is based on what category your credit score will put you in. Here is a general breakdown of how your score is rated:

800 - 850 = A+ Paper. Excellent. Worthy of all discounts available. Strong borrower file worthy of special pricing considerations for the ease that this file will be to process.

720 -799 = A Paper. Very Good. Worthy of the best rates available and at very competitive cost structures.

Not sure what you credit score is? Click here to get an estimate.

680 - 719 = Alt A paper. Good credit. This file will get very good rates and competitive cost structures at about .25 - .50% higher than a 720 score, and in some cases this also means a lower loan amount, or lower loan - value ratio they will allow. If there is no derrogatory info causing the score then it is usually under 700 here because of high consumer debt and the affect it has on the scores. A quick 1 week rescore can put this file over 720 and into the best rates available.

620 - 679 = B Paper. Fair credit. This can still be your score if you have high credit card debt and never made a late payment. Again, a quick rescore and we can get a major improvement here. The score may also reflect derrogatory info that needs to be addressed. This may mean lender excpetions which will require significantly more work on the broker’s side and as a result higher costs. Whether it is derog info or high balances the lender views this as higher risk and it will come with a higher rate (anywhere from 1% - 2% higher than an A paper rate, depending on many variables).

580 - 619 = C Paper. Poor Credit. Now we are getting into files with issues that require more attention and a lender that knows there stuff. They will be working hard to get these approved and will charge accordingly. Your strength will be in having good answers for whatever needs to be explained. This rating will cost you 2 - 3% higher rate. There are still a few that have these scores simply because of high consumer debt and not recent lates.

500 - 579 = D Paper. Very Poor Credit. These are files with definite derrogatory info and issues that require exceptions or special programs with high rate / cost structures/ Expect to pay 3%+ higher than any A paper products and with limited loan amounts and loan - value ratios allowed. Also, usually no stated income allowed at this level.

Less than 500 = Private Money Only. These are private investors willing to disregard the credit and loan up to 70% of the value of the home at a high (10+%) rate for a short, interest only term. This can have very mixed results and can cause more grief than it solves with a very high payment added to your situation. However, if accessing the equity at any cost will payoff the items needed to bring the score to a higher level than this can be used as a solution.

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Reader Comments

Malu Viju on November 24, 2006 at 7:25 pm

My credit score was 18 points within 1 month. why is that? My balance on the credits card are %90 below the crdit limit. I have not been late on the payments wihtin the last 2 years. i have 1 deregatory balance but this has been going on for 5 years.

R M on November 27, 2006 at 6:32 pm

@Malu

I’m assuming you mean that your credit rating dropped 18 points within a month. Have you recently applied for credit? Everytime you apply for credit it’s reported to the bureaus. If you have more than an “allowed” number of inquiries within a certain time period it can drop your score a couple points for each inquiry. If you ultimately open a new credit line after those inquiries then they are ignored.

The formula by which the bureaus decide on your score is a secret so anything explaining your score drop is just a guess. If your balances are high (close to 90% as I gathered from your statement) then you might be getting penalized for having those high balances over a long period of time.

Do you have a separate credit report from each time you ran it or just the scores? If you have the reports, then I’d recommend analyzing them side-by-side to identify any differences.

tom.voli on November 29, 2006 at 5:43 am

Inquiries can be the cause. I have seen as much as 20 point drops for an inquiry but as RM says…the bureaus do not provide any information to give us a clue how the scoring works. We use the experience of hundreds of files to make our assesment. Your score may also go up 18 points simply because of a change in the balance on the cards. You were probably as high in the score as you could be and had nowhere to go but down. Regardless, I am guessing with this sort of payment history you probably have a very good score.

Preparing for refinancing out of an ARM on January 8, 2007 at 11:43 am

[...] 1) You should determine what score you have now and what that will qualify you for. [...]

Terry on February 8, 2007 at 4:42 am

An article about “Need Information about Credit Scores? Try going ONLINE” and other free resources on Credit Score can be referenced at http://www.sohoindex.com/credit-score.

Cheers
Terry

Sherri Gilbert on February 15, 2007 at 12:27 pm

Hi
I am looking for a private investor to do a second mortgage on my home. I am a real estate agent and have just gone through a really bad 6/8 months with my husband not working for almost 5 months, had just built a new house and of course this was when the market went south. My scores have dropped under 500 so I can’t get a second mortgage. We have just gotten really behind and can’t get caught up. I just need someone to help me.

tom.voli on February 15, 2007 at 12:34 pm

This is common in todays market. There are private money sources that will lend up to 75% of the homes value. If your loan to value ratio is higher than that there are very few options. If you need a private money source contact me at (949) 766 5054.

Delores Jackson on April 15, 2007 at 7:13 am

I only have about $5000 that can only be used to buy a house. I wanted to buy a coop for a first time buyer.
My scores are 498/562/563
I am working on paying off my credit but it slow and I have to use my money in the next 30 days because I have to move.
Is there anyway that I can get a loan to buy a house?
could you tell me if you or anyone can help me?

Tom Voli on April 16, 2007 at 7:20 am

Your scores are low for a 100% purchase. The $5000 would likely be needed for closing costs. In addition, the rates you will get at a 562 mid score with 95-100% loan - value are very high (over 9%) and would likely not help.

amy on April 28, 2007 at 6:00 am

My husband and I are looking into buying our first home. Our credit scores are approx. 579/580/596. We don’t have much money to put down, and what little we do have will probably have to go to closing costs. We are looking for 100% financing and a loan of about 300,000. Is there any hope for us? And if so, do you know of any mortgage brokers that may be interested? We make about 90k/year between the two of us. Thank you!!

Tom Voli on April 28, 2007 at 7:04 am

There are programs that will allow for 100% purchase but the rates are horrible at that score. The best thing to do is use what cash you have to improve the scores above 620 which will provide a much better rate. Feel free to contact me and I can walk you through that process. The current real estate market is a buyers market and you should be able to negotiate costs being covered by the seller.

Sandy on May 16, 2007 at 5:33 am

I am looking at house and the seller is willing to help out alot, in fact he told the loan person to work with me as if I have all the money needed. My mid score is 565. The house is 147k, I bring home 42k. Is there companies that will give 100%? I don’t care about the interest rate at this time because I am sure we will get a get re-fin rate next year.

Tom Voli on May 16, 2007 at 6:23 am

Unfortunately no. Your score needs to come up a bit. The best thing to do is determine how that can be accomplished quickly so you can buy the house. Call me at (949) 766 5054 and I will walk you through a rescoring process.

ron on August 10, 2007 at 10:47 pm

hello. start with fico score equifax 623 experian 606 transunion 608. judgement from 2001 from mississippi what are the state laws for that can i have the judgement removed.could i buy a house bought two cars paid no problem credit cards paid on time. all payments on time for the past three years. what do you think

Tom Voli on August 14, 2007 at 7:43 am

Judgments remain on a credit report for at least 7 years in most states, 9 in others. In California for example, the judgment is good for 10 years and can be renewed at the end of 10 for another 10 years. They can haunt you until paid or included in a BK. However, the plaintiff would have to be diligent about enforcing it for it to be effective.

As for buying a house, your scores are low for any type of decent interest rate. You would need at least 10% down payment with those scores.

Angel on August 23, 2007 at 5:35 am

I was listed as an authorized user on accounts for which the individual filed bankruptcy. The individual was a family member, but not a spouse. These accounts have now brought my credit score down considerably. Is there anything I can do to get them removed?

Tom Voli on August 23, 2007 at 6:07 am

If you did not sign anything to take liability then this can be removed. You should seek a credit attorney. They can get it done for around $800.

Bren on October 25, 2007 at 4:33 pm

Hello, Question we are looking to buy a house within around 4 years, our credit score is about 500 on all 3, we have a foreclose showing from 2000 but then states that reported on 2006 when is it coming off? We voluntary gave us as repo on 2001 but why does it show different as opening date and reported date? Is there any hope to raise up our score within 4 years dramatically and if we have around 40,ooo to put down/closing costs? I just want to get rid of that foreclosure.

Tom Voli on October 25, 2007 at 5:16 pm

Getting rid of the foreclosure is not the issue. Once that is 4 yrs old it is not a large factor.

The bigger concern is getting POSITIVE ACCOUNTS on the credit report. You will need 2 major accounts (car loan, credit card with $2000+ limit etc). Your score will not increase much simply by removing the foreclosure which is now old.

nick on November 12, 2007 at 9:43 am

My wife and I are building a new home, going through the loan process right now. She is a stay-at-home mom with about $140 income per month, I work and make about $54k/year. My credit score (median) is 691 and my wifes is 750.00. Our debt ratio with the new house would be approx. 46-47%. We have no credit cards, just student loans and car loans.

With this financial information, would we likely be approved?

nick on November 12, 2007 at 10:27 am

I forgot to add that we will be putting 20% down.

Tom Voli on November 12, 2007 at 1:42 pm

There are a few bits of info needed for that assessment:

1) Total Loan Requested

2) Cash left after purchase

3) W2 wage earner or self employed?

4) Any BK’s or foreclosures in last 4 years?

5) Same job (or industry) for last 2 years with no job gaps?

Nick on November 12, 2007 at 3:51 pm

Total Loan Requested would be $153,400. Purchase price of $191,400.

We should have some cash after the sale of our house, this is not included in the 20% down that we are putting down on the new home.

I am a w2 wage earner.

no BKs or foreclosures at all

I have been in the insurance industry the last seven years.

Tom Voli on November 12, 2007 at 4:53 pm

Yes…you should qualify with no problem. Your scores are good enough to qualify for an acceleration loan where you would have a 30 year loan that would payoff in 10 years. I suggest checking this site I developed for additional info on accelerated mortgages.

http://www.newfoundequity.com/?affid=blog

Karen on February 3, 2008 at 4:22 pm

We are looking to buy a house towards the end of this year. Annual salary of about $40,000, and am looking for a house around $130,000 to $150,000 with 100% financing. Not sure of credit score now but it was at about 500. It has to be better now Nothing new negitive in last year or so and have paid off the biggest negitive item. There are 4 remaining negitives that are about to be paid off and it shows 14 possitive accounts. How long will it take to improve the score enough to buy a house? All bad accounts will be paid off by May and hope to buy around Nov when lease is up if possible.

Jess on February 6, 2008 at 11:26 am

Hi,

My median Credit score is 624. I have two charge-offs on my account from a few years ago from when my mother passed away. One of the charge off’s I was responsible for. However, I was only an authorized user on the other charge off that is listed.

I have two questions:

1. Would it be worth while to hire an attorney to have the authoized user charge-off removed?

2. Also, my husband and I are looking into buying a first home. Approx. mortgage would be 170,000. We have 10,000 for closing costs and down-payment. His credit score is in the 650’s. Will we qualify for a decent loan?

Thanks!

Jess on February 6, 2008 at 11:28 am

Oh, My husband and I make 75,000 per year. We do have significant student loan debt ($600 per month) an auto loan ($300) and credit card ($200).

MM on February 28, 2008 at 6:20 am

I just got pre-qualified for a 242,500 30-yr mortgage (7500 for down payment) at 6.5%. My averaged credit score is approximately 713.

Previously, when I had paid down my credit card balances by a couple thousand, my credit score was up to 736.

If I need to choose between paying off credit cards a bit to get over 720, thereby reducing the down payment amount to ~ 4-5k, and just saving the money for down payment and leaving the credit score at 713, which is better in terms of the rate I will get and the longer term benefits (eg, higher down payment translating to lower overall loan amount).

MM on February 28, 2008 at 6:21 am

Also note, my realtor said closing costs will be covered by the seller.

Tom Voli on May 29, 2008 at 6:59 am

Karen,

100% financing is rarely available these days and at very unfavorable rates. If you do not have at least 10% down payment you should consider waiting until you do.

Tom Voli on May 29, 2008 at 7:01 am

Jess,

There are attorneys that specialize in this and can help remove the negative information for a reasonable fee. Yes it is worth it.

As for the purchase, you should have at least 10% down payment + closing costs to insure a reasonable rate.

Tom Voli on May 29, 2008 at 7:04 am

Your score is sufficient for a good rate, however I am suspicious of a 6.5% rate on over 95% financing. This is all 1 loan? There is mortgage insurance on loans over 80% loan to value unless that is paid by the lender in which case the rates are higher. Something is not complete here.

ashley on July 6, 2008 at 3:29 pm

me and my husband are wanting to get a doublewide within in the next year and a half his credit score is 525. Is there anyway to up our credit score and how hard do you think it would be for us to get approved withthat credit score?

Tom Voli on July 7, 2008 at 10:36 am

Ashley,

It is nearly impossible to get a loan with a 525 score. It reflects significant credit problems which you have not disclosed here.

The best way to bring the score up is to pay all bills on time. If there are collection accounts that are outstanding you should pay those as soon as possible to allow the score to rebound.

It is essential that there are POSITIVE reporting accounts on the report for the score to come up. Simply paying off negative items will not do enough if there are no open accounts that report positive each month.

cstrigg on August 30, 2008 at 2:43 pm

Hi,
I have never been late on my mortgage. This whole week I have been sick with the summer flu. I called to make my a payment today and their system was down. I called back three time and finally got through and the system said it will not post my payment until the 2nd. My payment is due on the 1st. I am totally afraid this will affect my credit. My current scores are 620/642/660. I saw that you said you can increase scores if we had some additional cash. How do you do that?

Tom Voli on September 8, 2008 at 1:34 pm

CSTRIGG,

No, this will not affect your credit. All mortgages have a grace period (usually about 1o days) in which you can pay without penalty. Beyond that there is usually a penalty equal to 5% of the payment. It is not credit reportable until the payment is 30 days late.

Raising the credit score is accomplished by paying down the appropriate accounts. I use software provided to me by the reporting agencies that will answer how much it can be improved. Contact me at (949) 290 1795 for more info.

nancy on September 16, 2008 at 8:04 pm

Hello,

My husband and i are trying to get an assumption loan to take over my brother n laws house. My credit score is 608 his is 599, i just found an outstanding dept $189 (old utility) i will pay it tomorrow, everything else is from old late payments (nothing in 2008). i dont have any credit cards just financed some furniture for 3 months no intrest, those are also being paid on time. our income together is 120,000, the loan is for 54,000. We own our vechicles, the only dept we have is our student loans, his (24,000) mine (8,500). i need to look at my husbands credit and find out why his is so low (late payments im sure). we have both been in our jobs for over 2 yrs. we have never bought a home. what do you think we should do?

Tom Voli on October 17, 2008 at 7:28 am

With the current state of the economy and credit being so hard to get even with a good score you should spend time working on your scores. You will not qualify for any financing with those scores and recent lates on the report. FHA financing is available for lower scores but does require good payment history for at least 6 months and no mortgage lates at all. The low scores seem like they are the result of not having enough good credit reporting monthly. The furniture loan is too new and will not positively effect the score until it ages (gradually). A $2000 secured credit card that you keep a 10% balance on will also help. Above all, make consistent, on time payments.

Donna on February 4, 2009 at 3:20 pm

what credit score do you need to be considered for a job?

Tom Voli on February 4, 2009 at 3:52 pm

LOL…most jobs do not check credit.

Dave on February 17, 2009 at 1:42 pm

Hi i am looking to buy a home within the next month. I actually want to get pre-approved on or by 03/28/2009. My credit scores as of July last year were 499, 526, and 568. By the end of next month my credit scores will be around 588,640, and 586 because i am working with someone to fix my credit. Do you think i will have a problem getting a loan for about $300,000. at a rate of about 6.75%(at most) if i put about $59,000.00 down including closing cost. Last year I was denied, but this is the year i hope and pray, please let me know.

Tom Voli on February 17, 2009 at 1:52 pm

Hi Dave,

This will depend on your income verification. You must be able to afford the home. As long as there are no credit issues still outstanding and you can afford the loan you should qualify for FHA financing. Contact me when you are ready and I will get you pre-approved. (949) 290 1795

Dave on February 17, 2009 at 2:30 pm

Thank you and i will. I make about $42k/yr and i just got a raise, but i am glad to hear that i will be able to get my home. Thanks so much.

A on February 21, 2009 at 9:43 am

I am looking to buy a homearound 220,000 this year, I make 65,000-75,000 a year and my credit scores are 639/630/619 right now. No lates in the past 2 years but a few unpaid collections that are over 4 years old. Would I be able to qualify for a loan in this market, if yes would i have to pay these unpaid collections at closing time? Thank you for your help.

Tom Voli on February 21, 2009 at 9:56 am

First, while you would qualify for FHA loans, you would be better off working on the credit profile an getting the scores up over 680. This will open up conventional financing and get you a lower payment. FHA loans require mortgage insurance not required by conventional financing (unless the loan will be more than 80% of the value of the home). As a result, an FHA loan will have a higher payment than a conventional loan at the same interest rate. Minimum score for the conventional programs is usually 680 (the higher the score the better the rate and terms…740+ optimal). FHA scores are now a 620 minimum, they were recently 580 but no longer. FHA is easier to qualify for so it is a good option for those with less than optimal credit but good verifiable income.

For more info on credit score improvement check out: http://www.tomvoli.com/category/credit/

As for the outstanding collection accounts, usually the lenders will require anything above $2000 to be paid. Consider this though, any standard collection accounts are dropped from the report after 7 years. However, if they are public records…those stay for up to 10 years and in the case of judgments for example, can be renewed and resubmitted to your report for another ten years.

I would payoff anything less than 6 years old in general and ANY public records. This in combination with improving the credit profile will provide the best options.

Veronica on April 6, 2009 at 9:26 am

Hi my question is that in 2000 i helped my brother co-sign for a car i did not know he turned it in b4 his lease was over. I never did receive any letters from ford.. He filed Bankruptcy in 2004 and i have the discharge paper work.. Anyway that can be taken off my credit if it was discharged? Or am i still liable? Thanks

Veronica on April 6, 2009 at 9:29 am

I am looking to purchase a Home this year my score is 562 i have a few errors on my report that i am working on getting them off and cleared.. I make about 70,000 could that be possible to purchase a home getting my score a bit higher? thanks

Tom Voli on April 6, 2009 at 9:51 am

Veronica,

You will need to get the score up to 620+ for the better FHA rates. As long as that is the case, and there are no outstanding collections or judgments, tax liens etc…and no bankruptcy you may qualify. It would still be determined based on what the home value is, the amount of your monthly debt etc. Just saying that you make 70K a year is not a qualifying statement.

Tom Voli on April 6, 2009 at 9:53 am

Veronica,

Yes, you are still responsible for the debt. However, this will last for 7 years. In 2011 that will fall off your credit record.

Mia on April 10, 2009 at 10:54 pm

Hello Tom,

I purchased my condo about 2 years ago with the hopes that I could refinance. At the time I purchased my place my score was 720 on average. I’ve since then paid off my car ( and have recently opened 3 new credit card accounts 2 months ago (1 Visa-the others are department store cards). One of the cards is 10% of the limit and the other is at about 30%. I checked my score today and it is 649! Did opening these accounts reduce my score and if so when can I expect it to raise because 649 is unacceptable in this market. What can I do to increase my score? I was told that I didn’t have enough revolving credit which is the reason for opening the cards. Two years ago I only had one credit card.

Fortunate for me our president has provided options (modification or refinance) that was announced at the end of last month. Which option would you suggest under my circumstances? I still owe $230K on the condo, have never been late with an interest rate of 6.25%.

Tom Voli on April 11, 2009 at 5:56 am

Mia,

Yes…opening 3 new revolving accounts in such a short period is what caused the drop. They represent the largest portion of your credit record now and are new accounts with no payment history. Over the next 6 months the scores will rebound. Do not open any more revolving accounts. Typically 3 are more than enough.

As for the refinance options, loan modifications are not what you will be looking for. It is for people who have been having trouble with their payments , usually due to an adjustable they can’t get out of.

Your better option will be to refinance once the new guidelines make their way into the system. Not sure when they will take affect but this is the way to go. It is for people like you who have made timely payments but can’t refinance due to loan-value ratios.

shell on April 13, 2009 at 11:24 pm

I would like to purchase a house this year I just filed chapter 7 bankruptcy about two months ago and I have a previous chapter 7 from 2000 that is due to fall off next year my scores are 600/523/580 and I have steady income and a downpayment of $10,000 do you think that I could get financed or should I just wait the two years out.

Tom Voli on April 14, 2009 at 9:16 am

Shell,

If there was a home foreclosure in the BK it will take at least 4 years. You will need to wait at least 2 years regardless. Nobody will loan to you with 2 BK’s on your record.

Diane on September 16, 2009 at 9:17 am

Tom - you talk about a 1 week ‘rescore’. What exactly is that?

Thanks!

Tom Voli on September 16, 2009 at 10:48 am

Diane,

Please refer to this article: http://www.tomvoli.com/rescore-your-credit-profile-in-1-week/

matt on November 4, 2009 at 1:33 pm

Hi Tom, My credit scores are experian-713 equifax-722 trans-723 and my experian vantage score is-759. I’m trying to get an equity loan from my bank and they are getting a score of-629 this is from experian. How is this possible? Thanks

Tom Voli on November 4, 2009 at 1:39 pm

It is only possible if something new has been reported that you are not seeing on whatever report you have. Ask for a copy of the report.

Traci on December 30, 2009 at 9:12 am

My husband and I have a median score of about 570. Our gross income is approx. $105,000 annually. Our total monthly debts is $1200. We are working hard to build our credit since our bankruptcy a year ago. The problem is, we need a house! There are no rentals in our area that will work for our family (3 children) How long does it take to restore credit after bankruptcy. We have maintained timely payments for 6 months on everything.

Tom Voli on January 4, 2010 at 8:00 am

Traci,

Lenders are requiring 2 years from the date your BK was discharged.