Even though your credit report may be bad, sometimes compounded with a history of foreclosure and bankruptcy, you can still get a loan for home purchase, refinance, or even cash out of your current home. It doesn't matter whether you have charge-offs, collections, or tax liens on your credit report, as long as you can meet the guidelines for loan approval. In addition to a credit score, the credit industry uses classes or grades of credit risk to quickly assess a borrower. 

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A credit: If you have adequate income, impeccable credit and the required down payment you are considered an 'A' borrower. You can fall short in one of these areas and still be considered an 'A' borrower as long as the other areas can compensate for the weakness. For example, if you exceed the required monthly debt-to-income ratios (28% housing debt and 36% combined debt), you could make a larger down payment.

Many lenders will also excuse modest credit 'blemishes' if a reasonable clarification is provided (i.e. job transition, medical problems). Being 30-60 days late on one credit card payment is a typical blemish that could be accepted by a lender. Numerically, 'A+' Credit Score is 720+, 'A' Credit Score is 680-719.

If your score is 700-749, the historical delinquency rate is only 5 percent. For even better scores, in the range from 750-799, statistics show you have a delinquency rate of just 2 percent. If your FICO score is 800 or over, you have a 1 percent delinquency likelihood. All lenders will consider you a low risk.

But what about those that have more serious marks against their credit? Depending on how imperfect your credit history has been, lenders will typically place borrowers into the following credit categories, which are qualified by time frames:

A-minus credit: Acceptable blemishes within the last two years: Charge-offs, or collection accounts, of minor amounts (e.g. less than $500 in all) are acceptable. Medical bills, including hospitalization and clinic visits, are usually disregarded by the lender. As for payment habits, the borrower can have no more than two 30-day late payments, or one 60-day late payment on revolving or installment credit. Numerically, 'A-' Credit Score is 660-679. Statistics indicate that people in your category have a 15 percent delinquency rate.

B credit: Acceptable blemishes within the last 18 months: Up to four 30-day late, or up to two 60-day late payments are allowed on revolving and installment debt. If the credit ding is an isolated incident, a 90-day late payment might