Bank Statement Loan Credit Score Requirements

A. Usable Credit Score Determination

The determination of the qualifying score ensures that the lowest risk profile of the primary borrower is utilized for eligibility:

• The qualifying credit score for Bank Statement Loans is based on the middle score of the primary income earner.
• When a tri-merged credit report is used, the representative score is the middle score of three scores or the lower score of two scores.
• The lowest usable score permitted for all borrowers on the loan, regardless of the program tier, is generally 620.
• In refinance transactions, the use of the highest middle score is only eligible if that borrower meets continuity requirements.

B. Trade Line and Credit History

• Minimum Tradelines: In the absence of three credit scores, borrowers are generally required to have a minimum number of tradelines. For instance, the Horizon program requires at least two open and reporting tradelines for 24 months, or three open and reporting for 12 months, if the borrower does not have three scores reporting.
• Derogatory Credit: Programs address significant derogatory credit events, such as short sales, foreclosures, and bankruptcies, which require a mandatory seasoning period (e.g., 36 months in CMG Advantage).
• Housing History: Bank Statement programs often require a verified housing history, such as a 1x30x12 mortgage rating (one 30-day late allowed in the last 12 months). For rental history, a 0x30x12 rating (no 30-day lates in the last 12 months) is required.
• Credit Report Age: The credit report must be dated within 90 days of the note date in some programs. The credit report is generally valid for 120 days from the report date to the note date in other programs. All derogatory disputes must be resolved before the loan can close. Tax transcripts are generally not required on bank statement loans.