At Homebridge.com, we understand that, a client's credit report
may be full of blemishes, compounded with a history of
foreclosure and bankruptcy, but it is still possible to get a
loan for home purchase, refinance, or even cash out of your
current home. It doesn't matter whether you have charge-offs,
collections, or tax liens on your credit report, as long as you
meet the specific guidelines for loan approval.
Historically, the lending industry has used specific categories
to asses the credit risk of any particular borrower. If the
property checks out and you have sufficient income, impeccable
credit and the required down payment you are considered an 'A'
borrower. An 'A' borrower can walk into almost any lender and
get a mortgage loan. A borrower can fall short in one of these
areas and still be considered an 'A' borrower, as long as the
other areas can compensate for the weakness. For example, a
borrower that exceeds the required monthly debt-to-income ratios
(28% housing debt and 36% combined debt) could offer a large
down payment. Many lenders will also excuse modest credit
'blemishes' if a reasonable explanation is provided (i.e. job
transition, medical problems). Being 30-60 days late on one
credit card payment is a typical blemish that could be accepted
by a lender.
But what about those that have
more serious marks against their credit. Depending on how
tarnished your credit history has been, lenders will typically
place borrowers into the following credit categories, which are
qualified by time frames:
A-minus credit:
Acceptable blemishes within the last two years: Charge-offs, or
collection accounts, of minor amounts (e.g. less than $500 in
all) are acceptable. Medical bills, including hospitalization
and clinic visits, are usually disregarded by the lender. As for
payment habits, the borrower can have no more than two 30 days
late payments, or one 60 days late payment on revolving or
installment credit.
B credit:
Acceptable blemishes within the last 18 months: Up to four 30
days late, or up to two 60 late days payments are allowed on
revolving and installment debt. If the credit ding is an
isolated incident, a 90 days late payment is allowed within the
last 12 months. Charge-offs or collection accounts which are isolated, insignificant and
less than $1,000 in all, are acceptable. However, outstanding collection accounts less than
four years old must be paid. Bankruptcy or foreclosure that had
been discharged or settled previous to the 18 month time frame
is allowed.
C credit:
Acceptable blemishes within the last 12 months: No more than six
30 days late payments, three 60 days late payments, or two 90
days late payments are allowed on revolving or installment
credit. Open collections accounts and charge-offs may not exceed
$4,000 and must be paid in full. Bankruptcy or foreclosure that
had been discharged or settled prior to the last 12 months is
acceptable.
D credit:
The borrower in this class will demonstrate sporadic disregard
for timely payment or credit standing categories. Open collections
accounts, charge-offs, and judgments must be paid through loan proceeds.
The borrower who had filed bankruptcy and had been discharged prior to the last six months is
acceptable, as much as the ex-homeowner who had his previous home foreclosed and settled prior to the last six months. However,
mortgage payments cannot be longer than 90 days past due.
If you have any more questions or concerns about your credit
history, you can e-mail us at
support@homebridge.com.
