Less Than Perfect Credit

Are there loan programs available for borrowers with less than perfect to extremely poor credit? Absolutely. Fundamentally, all the lender wants to be assured of is that 1) one has the ability, and 2) the desire to repay the debt. The worse one's credit, the more evidence of one and two one will need to muster.

If you think you may be "credit challenged", one of the first things you'll want to know is, just how "less than perfect" is your credit? Fortunately, many bright people have dedicated their professional lives to creating methods for answering such questions. Statistical models which balance numerous credit factors provide methods for determining credit ratings. The models generate a single number—a credit, or FICO score—which provides lenders with a starting point for making decisions about lending money.

How do you get your credit score? Currently there is no law requiring that consumers be given their credit scores. Lenders aren't required to give you your credit score—but some will if you ask them. The lender should, however, tell you what factors contributed to your credit score if your score was a factor in delaying or denying your loan application. Credit bureaus don't include credit scores on consumer credit reports.

Assuming you know your credit score—what does it mean? Credit scores fall between approximately 375 to 900. Anything over 670 is considered good credit. Borrowers with good credit are able to get the best financing rates and terms available to the general public.

Lenders classify borrowers into the following credit categories based upon their credit scores. These categories can vary slightly among lenders. For example, a credit score of 620 could be a "B" with one lender, but a "C" with a different lender. The lower your score, the more expensive and restrictive your potential financing choices.

Credit Rating	Credit Score
A+	670
A-	660
B	620
C	580
D	550
E	520

It would be confusing at best to present general underwriting guidelines in an attempt to interpret credit ratings and scores as they relate to individual borrowers. In A- through E credit scenarios, dozens of factors are considered in the decision-making process. Your best assurance of getting the best possible loan is to shop among several lenders.