Bankruptcy

Dear Dr. Don,
If you have a bankruptcy on your credit report, is it possible to get financing for a new home?
Hopeful Homebuyer

Dear Hopeful,
It's not impossible, but lenders aren't going to beat a path to your door. The Mortgage.com Web site will walk you through a three-step approach to determining if you qualify for a mortgage loan.

Also, the American Bankruptcy Institute has a Consumer's Corner that has some interesting features for people with questions about the ins and outs of bankruptcy.

Finally, check out "What if I get turned down?" from Bankrate.com's Mortgage Basics and "Your credit: The basics."

Beacon Scores

Dear Dr. Don,
What is a perfect beacon score? What is a fair score? How do the scores range? Is 700 to 800 a great score?
Lit Lighthouse

Dear Lit,
The three major credit bureaus -- Equifax, Trans Union and Experian -- each have proprietary credit scoring models developed in conjunction with Fair, Isaac & Co. (FICO). Equifax names its model's results "beacon scores." Lenders want to assess the probability that a borrower will repay the loan. Credit scoring models attempt to predict that behavior.

Beacon scores can range from 300 points to 900 points but typically are between 500 points to 800 points. Most mortgage lenders will approve an applicant with a score of more than 640 points. Lenders will charge higher interest rates to borrowers with lower beacon scores because of the higher probability of default. Scores of more than 700 are great scores.

Related information: Dr. Don's biography Submit a question to Dr. Don Archive of Dr. Don columns

Bankrate.com writers base their answers on our editorial content and advice of financial professionals. We make no claims or representations about the accuracy, timeliness or completeness of such content, advice or the answers provided to you. Our content, advice and answers are intended only to assist you with your financial decisions. However, by its nature such information is broad in scope. Your financial situation is unique, and our content, advice and answers may not be appropriate for your situation. Accordingly, we recommend that you get different opinions and seek the advice of your accountant and other financial advisers before making any final decisions or implementing any financial or investment strategy.

-- Posted: Oct. 13, 1999