Most people have better credit than they anticipate. People of nearly all credit ratings can get mortgage financing for their homes. However, those with the best credit generally get better interest rates. Even with terrible credit, someone can qualify for a loan if they have a large enough down payment, or other circumstances that reduce the risk of default on payments. Our Loan Officers are thoroughly trained in how to evaluate a person’s credit and financing objectives to help them find the best solution for their needs.

The lending industry uses categories to assess the credit risk of each borrower. These categories are typically ‘A’ ‘A-‘ ‘B’ or ‘C.’ If the property you want to finance is appraised accurately, you have a sufficient down payment, and your income history looks good, you will qualify for a loan.

A person with no late payments, relatively low debt to their level of income, and a constant job is typically considered to have “A” credit. A person with a few minor bad debts (less than $500), a few unpaid medical bills, and less than 2 payments during the past two years that were 30 days late, or one payment that was 60 days late is considered to have “A-” credit.

If within the past 18 months, you have had less than 5 payments that were 30 days late, or less than 3 payments that were 60 days late, or a bankruptcy that was satisfactorily discharged you are considered to have “B” credit. And anyone with a worse credit history is generally considered to be a “C” credit risk.

Regardless of your credit score, you have the opportunity to explain why certain payments were made late (perhaps you were in transition between jobs, or traveling out of the country for 2 months). Most lenders don’t consider debts to medical providers as particularly alarming. And, if you increase your down payment, or accept a higher interest rate, you can still obtain a mortgage to allow you to purchase the home of your dreams.

In some instances, Providential will advise clients to settle outstanding obligations and cancel some installment credit accounts (like a department store or gas card) prior to applying for a mortgage.

If you are uncertain about your credit situation, we encourage you to contact a professional at Providential to review the situation and offer advice and guidance. Additionally, you should obtain a Free Copy of Your Credit Report through Providential.