Understanding Your Credit Rating
You might have heard the terms A, B and C credit. These
terms relate to credit scoring, which is a statistical method of assessing the
credit risk of a loan applicant. Your score is a number that indicates the probability
that you will pay back the loan. A credit score looks at items such as past
delinquencies, payment history, current debt level, length of credit history,
and types of credit.
A customer with A credit should have no trouble getting a mortgage and most
likely will be eligible for a lender's lowest rate based on a good credit history.
B credit loan applicants may be asked to provide supplemental credit documentation
and letters of explanation, but should still be able to obtain a mortgage without
any real difficulty. Borrowers with C credit may find loan terms and conditions
less attractive than the A loans and it may take longer for them to secure funding.
Coldwell Banker Mortgage has mortgage programs designed specifically for customers
with credit concerns.
These programs offer the following benefits to individuals with less than perfect
credit:
- Fewer documents required
- Allows higher debt to income ratios
- Program can be applied to primary residences, second homes or investment
properties
- Program includes self-employed and salaried borrowers
To prevent any surprises, it's a good idea for the
homebuyer to obtain a copy of his or her credit report before applying for
a mortgage. That way, if there are any errors, steps can be taken to correct
them before an application is placed.
If a homebuyer has had credit concerns and he or she is getting ready to seek
mortgage financing, concerns should be discussed honestly with the lender.
The homebuyer can be ready to provide a written explanation regarding any
past difficulties. Most mortgage lenders know that certain personal situations
such as illness or unemployment are legitimate cause for credit problems.
If such a situation has been resolved and payments have been on time for a
year or more, the home purchaser's credit will probably be considered satisfactory.
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