The lending industry uses categories to assess the credit risk of any particular borrower. If the property checks out and you have sufficient income, flawless credit and the required down payment you are considered as having "excellent" credit. Someone with "excellent" credit can walk into almost any lender and get a mortgage loan at a better rate then someone with "poor" credit.

Lenders will typically place applicants into the following credit categories

Excellent (Credit score higher than 680) - if you have had:

No 30-day late mortgage payments in the last 2 years No 30-day late payments on credit cards, auto loans or other consumer debt in the last 1 year No charge offs, judgments, repossessions in the past 2 years No bankruptcies, foreclosures in the past 4 years

Good (Credit score between 650 and 679) - if you have had:

No 30-day late mortgage payments in the last 1 year Less than three 30-day late payments on credit cards, auto loans or other consumer debt in the last 1 year No charge offs, judgments, repossessions in the past 1 year No bankruptcies, foreclosures in the past 4 years

Fair (Credit score between 620 and 659) - if you have had:

Less than one 30-day late mortgage payment in the last 1 year Less than three 30-day late payments on credit cards, auto loans or other consumer debt in the last 1 year Less than one charge offs, judgment or repossessions in the past 1 year No bankruptcies, foreclosures in the past 3 years

Poor (Credit score less than 620) - if you have had:

More than one 30-day late mortgage payments within the past 1 year More than three 30-day late payments on credit cards, auto loans or other consumer debt in the last 1 year Numerous charge offs, judgments, or repossessions in the past 1 year No Bankruptcies or foreclosures within the past 2 years Bankruptcies or foreclosures within the past 2 years

The above are general industry guidelines to make lending judgments on the borrower's loan application. There are no hard-and-fast rules of separating the borrower on the border line between one credit category and another. Also, there are compromising variations between one lender to the next depending on the degree of subjectivity involved in underwriting and how much each lender wants to commit their funds. It is important to review your credit reports regularly, in order to minimize the occurrence of errors and inconsistencies.