Question:

What is the explanation of credit score rankings and is the lender only influenced by the score?

Answer:

Many Americans have absorbed a wrong explanation of credit score ranking assuming that having less than great credit is the greatest obstacle to acquiring a house.

If there is a single late payment in an otherwise smooth credit history, a lender may ask for explanation rather than just take the credit score ranking. If you had a good reason to become late on your payment, than you probably won't have any problems taking a loan.

For people with generally good credit there are late payments allowed that will not affect your loan application and no explanation of credit score ranking is required.

For example, having two 1 month late payments on credit cards is ok; 1 month late payment on a car loan is ok, too. No late rent payments are allowed, though, or your credit score ranking may be affected.

Even if the explanation of credit score ranking does not satisfy the lender, if the borrower has had other high debt-to-loan ratio payments (which proves the borrower can handle higher debt level successfully); or if you have high net worth or good prospects to advance in your career, you are likely to be approved by the lender for a decent rate loan.

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