What does it mean to be an "A," "B," "C," or "D" borrower?
Mortgage lenders typically use the letters of the alphabet to rate borrowers. The letters rank the level of risk the lender perceives:
signifies prime borrowers, those who always pay bills on time and whose debt-to-income ratio is within acceptable limits;
borrowers are those who have been 30 days late on a charge or mortgage payment within the past year;
denotes a riskier credit profile, with several 30-day or 60-day late payments; and
indicates serious credit problems such as a long-term delinquency or a bankruptcy in the past.
The level of risk determines the interest rate available to the borrower. A borrower with a B, C, or D rating could end up paying a significantly higher interest rate on a mortgage than someone with an A credit rating.