Your Credit May Be Good, But Is It Jumbo Good?

 Your Credit May Be Good, But Is It Jumbo Good?

 "I have an 800 FICO so I know I'll qualify..."

We, here at Guaranteed Rate, pride ourselves on being a great jumbo mortgage lender. And because of my geography and clientele in the San Francisco Bay Area, we encounter a lot of higher loan amounts. Our rates are very competitive and we have many investors who can cover the needs of just about every jumbo loan scenario that can realistically be done these days. Moreover, we retain control of the underwriting, so we can exercise "makes sense" judgment and get files approved where many other banks and brokers cannot.

Yet, we are not immune to the quirks of the current state of jumbo mortgage lending and credit tradeline requirements definitely fall into the "quirk" category. A theme that will emerge here, and true to our opening statement, is that FICO score alone does not a jumbo approval make. As we'll see, the credit requirements for jumbo loans reach beyond a borrower's score and delve deeper into the components that comprise those very numbers, namely:

1. Credit history --- depth and age of tradelines.
2. Blend of credit --- distribution of open credit between mortgage, installment and revolving debt.
3. Use of credit itself --- how recently have accounts been used?

If you are in the market for a jumbo mortgage, it's important to work with a mortgage professional early, as some of these requirements simply cannot be met in the time period it would take to close a traditional escrow. Let's look at one jumbo investor's credit profile requirements:

• Minimum of 3 open tradelines with minimum of 12 month history for EACH borrower.
• Authorized user accounts cannot be used to meet minimum tradeline requirement.
• Credit depth must be a minimum of 2 years.
• All 3 tradelines must have had current activity.

Or another's:

• Minimum 3 tradelines open and active for at least 24 months.
• At least one of the three tradelines must be a mortgage or installment loan.
• Remaining tradelines must be rated for 12 months.

So, a moral of this story might be that you may indeed have a very good FICO score. But if you do not demonstrate to a jumbo mortgage investor that you can produce a high score by way of the behavior that they believe will most likely lead to repayment of their loan, you may find yourself on the outside looking in. Remember, if you don't like to use credit --- if you pay cash for that auto, if you eschew credit cards --- this can be highly effective financial behavior from a personal standpoint, but it can leave the mortgage lender in the dark about whether you've got the right credit curriculum vitae.