John Debrito Wolf Ranch Colorado Springs real estate professional

What's your score?

When I got into this business you needed good credit, three years on the job, ten percent down. It was pretty difficult to get a loan and banks had no way to judge who would get approved and who wouldn’t. They had basic standards by which to judge credit. Each company would approve you to their own standard. Ten years ago, credit scoring had little to do with mortgage lending. Lenders reviewed the creditworthiness of a borrower or an underwriter would make approvals based on past payment history. Things have sure changed over the years! Lenders studied the relationship between credit scores and mortgage delinquencies. There was a definite relationship. Almost half of the borrowers with credit scores below 550 had become 90 days delinquent at least once during their mortgage. On the other hand, only 2 out of every 10,000 borrowers with credit scores above 800 became delinquent. Yes, a huge difference! So lenders began to take a closer look at credit scores and this is what they found out. The chart below shows the likelihood of a 90 day delinquent see for specific credit scores

Credit score odds of going into a delinquency

Credit score         Odds of a delinquency

595        2.5 TO 1

600       4.5 TO 1

615        9 TO 1

630        18 TO 1

645       36 TO 1

660       72 TO 1

680       144 TO 1

700       288 TO 1

780 +      576 TO 1

 

So, if you were lending $300,000 who would you lend it to? Credit scores range from 300 to 850.

Watch this video on credit scores

John DeBrito

SOLD Real Estate Company
Phone 719-270-1168
E-mail Soldrealestate@comcast.net