What's your score?

In the past, obtaining a mortgage loan required a good credit score, a minimum of three years of employment, and a down payment of at least 10%. The process of evaluating creditworthiness was based on basic standards, with each lender applying their own criteria. However, over the past decade, there has been a significant shift in how credit scores are used in the mortgage lending industry. Lenders have conducted studies on the relationship between credit scores and mortgage delinquencies, and have found a clear correlation. Borrowers with credit scores below 550 were found to have a high likelihood of becoming delinquent on their mortgage, with almost half of them being at least 90 days delinquent at some point. On the other hand, the likelihood of delinquency among borrowers with credit scores above 800 was found to be significantly lower, with only 1 in every 900 borrowers becoming delinquent. As a result of these findings, lenders have begun to place increased emphasis on credit scores in their loan approval process. The chart below illustrates the likelihood of a 90-day delinquency for specific credit scores.