Mortgage lenders give a great deal of importance on credit score in order to rely greatly on credit reports to evaluate credit risk. Whenever you apply for a mortgage to a lender, he will use the information to check out whether you have missed payments, carry high balances, or are in other ways over extending yourself financially.

Following are the categories of credit worthiness. These are some general guidelines set by major lenders. Some other factors also determine the limit and conditions through which you would be granted the mortgage.

Excellent Credit

• Credit scores 720 and above
• 5 trade credit lines (credit cards, auto loans, mortgages), each open for at least 24 months
• All accounts paid as agreed
• No public records of bankruptcy, foreclosure, serious past due accounts, or collections within the last 10 years
• Low current credit balance relative to maximum available credit limit
• Minimum number of credit inquiries

Very Good Credit

• Credit scores between 680-719
• 5 trade credit lines (credit cards, auto loans, mortgages), each open for at least 24 months
• All accounts paid as agreed
• No public records of bankruptcy, foreclosure, serious past due accounts, or collections within the last 7 years
• Low current credit balance relative to maximum available credit limit
• Minimum number of credit inquiries

Good Credit

• Credit scores between 620-679
• 5 trade credit lines (credit cards, auto loans, mortgages), each open for at least 24 months
• Most accounts have been paid as agreed, with only occasional late payments
• No public records of bankruptcy, foreclosure, serious past due accounts, or collections within the last 10 years
• May have significant current credit balance relative to maximum available credit limit
• Several recent credit inquiries

Fair Credit

• Credit scores between 580-619
• 3 trade credit lines (credit cards, auto loans, mortgages), each open for at least 24 months
• Most accounts have been paid as agreed, with only occasional late payments
• No public record of bankruptcy, foreclosure, serious past due accounts, or collections within the last few years
• May have significant credit balance relative to maximum available credit limit
• Several recent credit inquiries

Poor Credit

• Credit scores 579 and below
• One or more accounts have not been paid as agreed
• May have had a bankruptcy, foreclosure, serious past due accounts or collections
• High number of recent credit inquiries
• Proportion of revolving balances to revolving credit limits is too high