I wouldn't call me a guru by any means.
Anyways, the bottom line is that someone with alot of past credit problems who maybe just has not taken alot of interest in bringing up their score but who can show stability in both finances and their employment can get approved under 620. In reality that is not usually the case. Most people that hover around 620 tend to have recent credit issues (past 24 months) and/or high debt and low down payment available. As Dallas like to campare it to.... Pretend your file is getting split up on a scale. All the ggod things on one side and the bad things on the other. A sub 620 score is a heavy weight that will have to be counterbalanced by everything else in your file being put on the good side (i.e job history, DTI, down payment, recent credit history, etc). But, if say you are at 605 FICO and are trying to get approved for a 45% backend DTI, those 2 negatives are likely to be too much to get approved. Same goes for 605 and recent late or collection activity, etc. In any of these cases, you will pay a premium for the loan if you do get approved. I have seen 1/4 to 1/2 % interest rate increase and higher fees in alot of these type cases, and very often there are the type of things that fall apart for many reasons...For instance, just say you are at 605 when you apply. Well, for 30 days FICO does not count your inquiry against you. But with sub 620 scores, there are almost certainly going to re-check credit right before close to make sure nothing has changed and there is no new debt. Well, say it takes you 15 days to find a house and 30 days to close (a very fast turn-around). By closing, your score will have been hit with the new inquiry point loss so you will probably be at more like 595 or so. Any drop in FICO score is enough for an LO to deny, but add in the fact that you are already below the normal minimum and you can have some trouble even if the rest of your file is golden.
Starting Score: eq 383tu 417
