Wells Fargo is once again setting sail on subprime mortgage waters, despite how choppy they were several years ago. The bank will consider mortgage applicants with credit scores as low as 600, announced Franklin Codel, a Wells Fargo mortgage executive. Previously, the minimum was 640, and this change applies to purchase mortgages to be guaranteed by the Federal Housing Administration.

Lenders routinely re-evaluate their standards as consumer credit trends shift, and Wells Fargo considered applicants with credit scores in the low 600s as recently as the fourth quarter of 2011, said Tom Goyda, a Wells Fargo spokesman. In fact, that threshold was 500 in January 2011. The 640 benchmark had been in place since about November 2012, before the change to 600 last year.

There are dozens of credit scoring models, but most lenders use the 301 to 850 range, and anything in the 600 to 649 bracket is considered poor, or subprime. Consumers in the next highest credit tier (650 to 699, aka near prime) enjoyed increased access to home loans over the last several quarters, according to data from Experian-Oliver Wyman Market Intelligence Reports and Experian’s IntelliView tool. (The tool uses the VantageScore model but breaks down borrowers into tiers like prime, near-prime, etc.)

http://finance.yahoo.com/news/wells-fargo-getting-back-subprime-123018201.html