ABC's of Mortgage Credit

The mortgage industry tends to create its own language and credit rating is no exception. BC Mortgage lending gets its name from the grading of one's credit based on such things such as payment history, amount of debt payments, bankruptcies, equity position, credit scores, etc.

We have compiled a guide to help you estimate your credit grade. This is only a guide as many companies have exceptions that may result in more strict or more lenient guidelines.

A General Guide to Credit Grades

 

    Credit Debt   Max    Mortgage     Revolve     Install
    Score  Ratio  LTV   30  60  90  30  60  90  30  60  90 
A+   670   36     95    0   0   0   2   0   0   1   0   0
A-   660   45     95    1   0   0   3   1   0   2   0   0
B    620   50     85    2   1   0   4   2   1   3   1   0
C    580   55     75    4   2   1   6   5   2   5   4   1
D    550   60     70    5   3   2   8   8   4   7   6   2
E    520   65     60    6   4   3   10  10  6   10  8   3

Bankruptcy/Foreclosure
A+   None Allowed Within 10 years
A-   Minimum 2 Years, Re-Established Credit	
B    Minimum 2 Years, Some Lates  	
C    Minimum 1 Year
D    Discharged
E    Possible Current

The figures shown here are estimates. When trying to figure your credit grade, keep in mind the following principles:

  • Other Things Being Equal-When your have derogatory credit, all of the other aspects of the loan need to be in order. Equity, stability, income, documentation, assets, etc. play a larger role in the approval decision.
  • Worst Case Scenario-When determining your grade, various combinations are allowed, but the worst case will push your grade to a lower credit guide. Mortgage Lates and Bankruptcies are the most important.
  • Going Once, Going Twice-Credit patterns are very important. A high number of recent inquiries and more than a few outstanding loans may signal a problem. A "willingness to pay" is important, thus late payments in the same time period is better than random lates as they signal an effort to pay even after falling behind.