Credit Scores Required for Kentucky Mortgage Loan Approvals for FHA, VA,...

Most lenders will wants a middle credit score of 620 for KY First Time Home Buyers looking to go no money down. The two most used no money down home loans in Kentucky being USDA Rural Housing and KHC with their down payment assistance will want a 620 middle score on their programs.


If you have access to 3.5% down payment, you can go FHA and secure a 30 year fixed rate mortgage with some lenders with a 580 credit score. Even though FHA on paper says they will go down to 500 credit score with at least 10% down payment, you will find it hard to get the loan approved because lenders will create overlays to protect their interest and maintain a good standing with FHA and HUD.


Another popular no money down loan is VA. Most VA lenders will want a 620 middle credit score but like FHA, VA on paper says they will go down to a 500 score, but good luck finding a lender for that scenario.


A lot of times if your scores are in the high 500’s or low 600’s range, we can do a rapid rescore and get your scores improved within 30 days.

Kentucky USDA credit score and mortgage requirements

 Credit Scores and the Kentucky USDA Rural Development Loan Program 

The Kentucky USDA Rural Development Loan Program is by far the most credit score friendly loan program currently available. While USDA is willing to work with scores lower than 640 most lenders won't. Thus, pragmatically the minimum credit score required by USDA is 581.

For Kentucky homebuyers with a minimum credit score of 640 lenders may streamline the credit approval process normally required as part of the underwriting process. This means that a borrower:

	With a lack of credit "depth" will not have to document non-traditional credit items such as utility or insurance payments
	A negative past credit history may allow the Underwriter to not request letters of explanation for the cause of the past challenges
	Collection accounts can remain open provided the Underwriter believes it unlikely that the account will eventually turn into a judgment

However, USDA is not willing to overlook certain overtly negative credit items even when the credit scores are over 640. For instance borrowers with any of the following adverse past credit should not expect to obtain credit approval using the USDA loan program:

	Foreclosure or short sale within the last 3 years
	Chapter 7 bankruptcy discharged within the past 3 years
	Chapter 13 bankruptcy debt restricting plan completed within the last 12 months
	Late mortgage payments within the last 12 months
	Applicant or co-applicant delinquent on a federal debt; such as taxes, student loans, or previous agency loan (i.e. VA loan in which the eligibility was forfeited due to a foreclosure)

USDA may be willing to give a borrower an exception to a past bankruptcy or foreclosure prior to the three year period provided the borrower can document the cause of the past negative credit experience as being related to an illness or job loss and unlikely to reoccur.

Once the credit score exceeds 640, USDA allows this score to be considered as justification for allowing the borrowers debt-to-income-ratio to exceed the target ratios of 29% for the housing costs and 41% for the total debt ratio. Frequently USDA will approve loans where the housing ratios are in the high 30% range and total debt ratios are in the high 40% range.

Bottom line the Kentucky USDA Rural Development Loan Program is more flexible in approving a perspective borrower than any other loan program. But like any loan program today, the Loan Officer shouldn't assume that this level of credit flexibility will result in an automatic positive underwriting decision if the Underwriter doesn't feel strongly that the borrowers chance of success at homeownership is strong.

Why you don't need an 800 credit score for a Kentucky Mortgage Loan Approval

Your credit score — that sometimes mysterious number that reflects how responsible you are with your credit — plays a gigantic role in your overall financial life.

Pretty much any time you apply for credit, someone (or in some cases, a computer) will be looking at that number to determine if they are willing to extend that credit to you and, if so, at what rate. That applies whether you’re applying for a new credit card, a car loan or a mortgage.

Hopefully you know what your credit score is (if not, we’ll help you find out), but do you know if your credit score is good?

In this article, we’ll cover what money expert Clark Howard and others consider a good credit score, where your can track yourscore, and how to improve it if it needs work!

What is a good credit score?

First, it’s important to know that your FICO credit score (by far the score used by most lenders) is a three-digit number that can range from 300 to 850, with 850 being the absolute highest score you can achieve.

So, how do things break out along that range when it comes to “good” and “poor” scores? Here’s how credit reporting agency Experian sees it:

Experian

As you can see, according to this chart, the majority of Americans have “Good,” “Very Good,” or “Exceptional” scores.

In fact, according to Credit.com, as of 2016 (the latest numbers available), the average FICO score nationally was 699. That was an all-time high!

But different creditors have different ideas about what makes a “good” credit score, and for that reason your ability to get credit and the rate you’re offered can vary from lender to lender. This is why some people aim for a score of 850 — something Clark says “you’re crazy if you obsess with.”

You don’t need to aim nearly that high.

“If you can get up to around a 760, you’re going to get the same benefits, the same offers, that someone who has an 840 score is going to get,” says Beverly Harzog, Credit Card Expert and Consumer Finance Analyst for U.S. News & World Report.

That said, if your credit score is currently in, say, the low 600s, 760 might seem a long way away. That’s still no reason to be discouraged!

There are other numbers that can make a huge difference in the offers you receive and the rates you can get on loans, Clark says:

“There are certain breakpoints where things get easier for you. One that’s really important is being around a 680. That’s a point at which people look at you differently than when you’re below that.”

You can also get free credit reports (which are more comprehensive than what you get with Credit Karma or Credit Sesame) from all three major credit reporting bureaus once a year at AnnualCreditReport.com.

How can you improve your credit score?

To improve your credit score, you should address each one of the factors that goes into calculating your score individually. According to MyFICO.com, those factors are:

MyFICO.com

Payment History

As you can see from the graphic, the single most important factor is your payment history. That means that not paying your bills on time can do serious damage to your credit score. Even if you’ve had some late payments in the past, you can improve your score going forward by paying each and every bill on time.

Amounts Owed

The second most important factor is the amount you owe on your credit lines. This is calculated as a percentage: the amount you owe divided by the total amount of credit you have available. It’s best to keep this under 30% — even better if you can keep it under 10%.

So, if your total credit line (between all of your credit cards and other loans) is $10,000, it’s good to owe less than $3,000 and great if you owe less than $1,000.

Length of Credit History

The next most important factor is your length of credit history. This is determined by the date you opened your earliest credit account that remains open today. Since you can’t go back in time and open an account any earlier, the most important thing you can do in this area is make sure you don’t close any of your oldest accounts.

New Credit and Credit Mix

Finally, accounting for 10% each of your credit score are New Credit and Credit Mix.

New Credit means accounts that you either open or apply for that result in what’s called an “inquiry” to your account. Almost any time you apply for credit (whether you are approved or not) your score will drop a bit. It usually doesn’t take long to recover, but the important thing to remember here is to only apply for credit you really need. If you apply for every card offer you receive, your score will suffer.

Credit mix refers to the different types of credit you have. Again, this one is not a huge deal, but someone with credit cards, a mortgage, and a car loan will general be judged more favorably than someone who just holds credit cards

Full article link below


https://clark.com/credit/good-credit-score/

Joel Lobb (NMLS#57916)
Senior  Loan Officer

American Mortgage Solutions, Inc.

10602 Timberwood Circle Suite 3

Louisville, KY 40223

Company ID #1364 | MB73346

Text/call 502-905-3708
kentuckyloan@gmail.com

If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 502-905-3708.

Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant's eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant  Equal Opportunity Lender. NMLS#57916http://www.nmlsconsumeraccess.org/

-- Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.

Credit Inquiries--How much do they effect my score?

Credit Inquiries Are A Formal Process

A "credit inquiry" is a formal request to review a person's credit report.

Credit inquires are grouped with other traits into a credit-scoring category called "New Credit". New Credit represents 10 percent a person's complete credit score.  On the scale of 300-850, therefore, credit inquiries represent a tiny portion of a maximum of 85 points to a FICO.

There are many times of credit inquiries, but really only 4 of the set can impact a person's credit score:

1.    A credit check for a mortgage loan

2.    A credit check for an auto loan

3.    A credit check for a credit card application

4.    A credit check for a store credit card, or consumer loan

These 4 types are singled out because, in each case, the inquiry is made by the applicant in order to get access to more debt.  Because extra debt increases the probability of default, credit inquiries can sometimes foreshadow trouble.

Even then, however, the risk of default varies by application type.

For example, credit card applications can be more damaging to a credit score than a mortgage application.  This is because credit card debts tend to revolve higher over time versus a mortgage which eventually pays down to $0.

So, all things equal, a credit card application will harm your credit score more than an application for a home loan.

A Credit Inquiry Lowers Your FICO By 5 Points

When compared to the other credit scoring elements, Credit Inquiries is a relative nothing.

In the official FICO scoring model, Payment History and Credit Utilization account for 65% of a score, combined, and the amount of time during which you've had credit to your name accounts for 15%.  These three areas are over-weighted because the bureaus are more concerned with what you've already done with your credit versus what you might do with more of it.

Your credit past is the best clue to your credit future and it's one of two reasons why it's okay to give your social security number to as many lenders as you want. The impact of a credit inquiry is tiny next to the value of being a Model Credit Citizen.

A mortgage credit inquiry is estimated to lower a credit score by just 5 points.

Unfortunately, we'll never know for sure because the very act of examining the credit score causes it to move. In Chemistry, this is called the Heisenberg Principle.  On MTV, it's called The Jersey Shore Syndrome.  Put a camera on something, and it changes.

The Credit Bureaus Don't Hit Your FICO Twice

The second reason you should shop around with lenders is that -- unlike applying for multiple credit cards -- applying for multiple mortgages won't count as multiple, consumer-initiated inquiries. This is a common thing.

You might apply for 5 credit cards and use them all. You're not going to be approved for 5 mortgages.

As such, the credit bureaus have made it formal policy to permit "rate shopping".  Talk to as many lenders as you want in a 14-day time frame; have your credit checked as often as you'd like; compare rates and fees.  All of the inquiries will be lumped into a single application.

It's good for you and it's good for the bureaus. Your credit scores stay high and TransUnion, Equifax and Experian collect more fees from the banks.

Advice From The Credit Bureaus On Getting Low Rates

To promote rate shopping and to lessen The Fear of Credit Inquiry, the people behind the FICO brand spell out for you the best way to get the best mortgage rates possible:

1.    If you want the best rate, you should "shop around"

2.    Limit rate shopping to 14-day timespan to keep your credit scores high

3.    Mortgage lenders can't give accurate rate quotes without a credit score so give up your social security number

Metaphorically, not letting your lender see your FICO is like not letting your doctor check your blood pressure. You'll get a diagnosis when the appointment is over -- it just might not be the right one.

Joel Lobb

Senior Mortgage Loan Officer

-- 

Joel Lobb
Senior  Loan Officer

(NMLS#57916)

American Mortgage Solutions, Inc.

10602 Timberwood Circle, Suite 3

Louisville, KY 40223

 phone: (502) 905-3708

 Fax:     (502) 327-9119

kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

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CREDIT RULE CHANGES FOR KENTUCKY HOME BUYERS FOR GETTING A MORTGAGE LOAN WITH COLLECTIONS ON CREDIT REPORT

CREDIT RULE CHANGES FOR KENTUCKY HOME BUYERS FOR GETTING A MORTGAGE LOAN WITH PREVIOUS COLLECTIONS ON CREDIT REPORT

On the 8th of June, there will be changes on how your credit is reported to the main credit bureaus for experian, equifax and transunion.

Changes include:

**Collections that aren’t at least 180 days old will be rejected by the 3 major credit bureaus. You will now have time to pay them off before it is even reported.
**Medical collections will no longer show on credit reports as long as it is being paid (through either you or insurance).
**Collection accounts that have not been updated in six months or more will not be factored into scores.
**Any collection that did not result from a contract or agreement to pay by the consumer, will be removed.

-- 

Joel Lobb
Mortgage Loan Officer

Individual NMLS ID #57916

American Mortgage Solutions, Inc.

10602 Timberwood Circle 

Louisville, KY 40223

Company NMLS ID #1364

click here for directions to our office

Text/call:      502-905-3708

fax:            502-327-9119
email:          kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

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Credit Score Information for Kentucky Mortgage Loan Approvals

Credit Score Knowledge Quiz Information for Kentucky Mortgage Loans

 Credit scores are taking an even more important role in qualifying for a Kentucky FHA, VA, Rural Housing and Fannie Mae mortgage today, which makes it vital to maintain a good credit history. See how much you know about credit scores with our Credit Knowledge Quiz and what you need to focus on to better your score.

1. Question 01

   A credit score is:

   
   
   • a. A three-digit number summarizing the state of your credit
   • b. An alphabetical score grading your creditworthiness
   • c. A numerical score reporting how much money you owe
   CORRECT

   The major credit reporting bureaus might report slightly different scores, but all three use a three-digit number to summarize the state of your credit. A credit score is a number that summarizes the historical credit information on a credit report. The number reflects the likelihood that you will become delinquent on a loan or a credit obligation in the future.

2. Question 02

   What is the number-one contributing factor to a good credit score?

   
   
   • a. Length of credit history
   • b. Amounts you owe
   • c. Payment history
   CORRECT

   Paying bills on time is generally the single most important contributor to a good credit score. Being late on any bill, for any length of time, is a possible indication of future nonpayment of debt and is almost always viewed negatively by lenders. Any late payments will remain on your credit report for up to seven years.

3. Question 03

   Does each consumer have just ONE generic credit score?

   
   
   • a. Yes
   • b. No
   • c. Don't Know
   CORRECT

   The answer is "no." Most Americans have many generic scores reflecting the use of the scoring system and the source of the credit report—Experian, Equifax, or TransUnion. One of the most common myths about credit scores is that there is only one credit score. Web sites or financial advisers who claim there is only one "real" credit score either are misinformed or are being misleading. In fact, there are many different credit scores used by lenders (according to some estimates, more than 1,000), although some scores are used more than others. While there are many credit scores on the market, VantageScore® is the first credit score developed jointly by Experian and the other national credit reporting companies, TransUnion and Equifax.

4. Question 04

   Your credit score affects?

   
   
   • a. Whether you can get a loan
   • b. Your interest rate
   • c. Both A and B
   CORRECT

   In addition to using your credit score to help decide whether it's a good idea to give you money, lenders use the score to determine your rate. In general, the better the score, the lower the rate – and the lower your payments.

5. Question 05

   Who collects the information on which credit scores are most frequently based?

   
   
   • a. FICO and VantageScore
   • b. Three main credit bureaus – Experian, Equifax, and TransUnion
   • c. Individual lenders
   • d. Federal government
   CORRECT

   The answer is the "three main credit bureaus," which collect information on the credit use of more than 200 million Americans and make it available in credit reports. FICO and VantageScore have developed the most popular scoring systems for using credit reports to compute credit scores.

6. Question 06

   Lenders look at credit scores when deciding whether to extend which type of credit?

   
   
   • a. Credit cards
   • b. Mortgages
   • c. Loans
   • d. All of the above
   CORRECT

   Banks, credit card companies, auto dealers, retail stores and other lenders decide if you get your loan. Most businesses that issue credit or loans use credit scores to quickly summarize a consumer's credit history, saving the need to manually review an applicant's credit report and providing a better, faster decision. Although many additional factors are used in determining whether or not you receive the credit you applied for — such as an applicant's income versus the size of the loan — a credit score is a leading indicator of one's basic creditworthiness. Credit reporting agencies do not make lending decisions.

7. Question 07

   How important is it to check the accuracy of your credit reports at the three main credit bureaus?

   
   
   • a. Very Important
   • b. Somewhat Important
   • c. Not Very Important
   • d. No Big Deal
   CORRECT

   The correct answer is "very important." Lenders may have provided inaccurate information, or failed to add accurate information, about your payment history to your credit reports. And, since many consumers have similar names, even accurate information may have been added to the wrong file. Fortunately, a federal law requires the three main credit bureaus—Experian, Equifax, and TransUnion—to provide on request a free copy of your credit report once a year. An easy way to get these reports is to visit www.annualcreditreport.com or call 877-322-8228.

8. Question 08

   Which of the following actions helps a consumer raise a low score or maintain a high one?

   
   
   • a. Make all loan payments on time
   • b. Avoid opening several credit card accounts at the same time
   • c. Use a credit card keeping the balance under 25% of the credit limit
   • d. All of the above
   CORRECT

   The correct answer is "all of the above," though it takes much longer to raise a low score than lower a high one. For example, someone with a good score may lose 100 points if they miss payments on two credit cards. But they may gain only 50 of these points back by making all mortgage, car, and credit card payments on time for six months.

9. Question 09

   After paying off a high-interest credit card, you should:

   
   
   • a. Continue using it occasionally
   • b. Close the account
   • c. Use the full amount of available credit every month
   INCORRECT

   You may be tempted to close old accounts you're not using, but that won't help your credit scores and may actually hurt them. It reduces the amount of your available credit, which can lead to lower scores.

10. Question 10

    Which of the following does a credit score MAINLY indicate?

    
    
    • a. Knowledge of consumer credit
    • b. Amount of consumer debt
    • c. Risk of not repaying a loan
    • d. Financial resources to pay back loans
    CORRECT

    The answer is "risk of not repaying a loan." The other factors may influence this risk, but it is the risk itself that a credit score tries to measure.

11. Question 11

    How long can negative items on your credit history impact your score?

    
    
    • a. 1 year
    • b. 3 years
    • c. 5 years
    • d. 7 years
    CORRECT

    Negative items generally affect your score for up to seven years, but, as time goes by, their impact lessens. If you pay your bills, keep account balances low and don't open a lot of new accounts, your score can rebound surprisingly quickly.

12. Question 12

    Are missed payments a factor used to calculate a credit score?

    
    
    • a. Yes
    • b. No
    • c. Maybe
    CORRECT

    Paying bills on time is generally the single most important contributor to a good credit score. Being late on any bill, for any length of time, is a possible indication of future nonpayment of debt and is almost always viewed negatively by lenders. Any late payments will remain on your credit report for up to seven years.

13. Question 13

    Which of the following is NOT considered when calculating your FICO score?

    
    
    • a. Your payment history
    • b. The types of credit you are using
    • c. The amount of debt you owe
    • d. Your income
    CORRECT

    Your FICO score consists of 35% Payment History, 30% Amounts Owed, 15% Length of Credit History, 10% New Credit, 10% Types of Credit used. Credit scores use information from three key areas of your credit report: account information (such as credit cards, auto loans, student loans, mortgages and rent), public records (such as tax liens or bankruptcies) and inquiries (requests by lenders to view your credit). Information such as race, gender, where you live and marital status are not used in credit scores.

14. Question 14

    Applying for credit cards in order to just receive a free sign-up gift (t-shirt, mugs, etc.) has no impact on my credit profile?

    
    
    • a. True
    • b. False
    INCORRECT

    Opening an account to get freebies such as filling out a credit card application just to get a free t-shirt, goofy hat, or official university credit card isn't worth the risk. Most students don't realize that applying for multiple credit cards in a short period of time may cause the credit bureaus to regard this as very risky behavior, which in turn drives their credit scores down.

15. Question 15

    Is marital status a factor used to calculate a credit score?

    
    
    • a. Yes
    • b. No
    • c. Maybe
    CORRECT

    Marital status is not one of the factors used to calculate a credit score. If you hold a joint credit account, have cosigned a loan or have authorized use of another person's credit, these items could affect a score if they appear on your credit report. It's important that joint account holders or authorized users understand that their credit behavior does affect the other joint account holder or main account holder.

16. Question 16

    Does a cell phone company use a credit score to decide whether a person can buy a service and/or what price they'll pay?

    
    
    • a. Yes
    • b. No
    • c. Maybe
    CORRECT

    Cell phone companies may use credit scores to decide whether you can buy a service or if a deposit will be required.

17. Question 17

    Does a mortgage lender use a credit score to decide whether a person can get credit and what interest rate they'll pay?

    
    
    • a. Yes
    • b. No
    • c. Maybe
    CORRECT

    Mortgage lenders use credit scores to help them decide if you can get credit and what interest rate you'll pay.

18. Question 18

    Does a landlord use a credit score to decide whether a person can rent a property and/or what price they'll pay?

    
    
    • a. Yes
    • b. No
    • c. Maybe
    CORRECT

    Landlords use credit scores to decide whether you can rent a property and/or what price you'll pay.

19. Question 19

    Does an electric utility use a credit score when establishing service for a consumer?

    
    
    • a. Yes
    • b. No
    • c. Maybe
    CORRECT

    Electric utilities may use credit scores as they evaluate whether or not to require a deposit.

20. Question 20

    Your credit card company just increased the spending limit on your card. Will this help or hurt your credit score?

    
    
    • a. Help
    • b. Hurt
    CORRECT

    As long as you don't borrow more money, the higher limit improves your credit utilization ratio, which is the percentage of your available credit that you've used. Lenders like you to use only a small percentage of your available credit so you don't appear to be maxing out your cards. Charging $3,000 when you have a $10,000 limit, for example, looks a lot better than charging $3,000 when your limit is only $5,000.

21. Question 21

    In regards to a married couple purchasing a home, the mortgage lender uses which credit score when more than one borrower is applying together?

    
    
    • a. The highest score between both people
    • b. The lowest middle score between both people
    • c. The average of all scores
    • d. The median score between both people
    CORRECT

    Both you and your spouse have individual FICO scores. When you apply for credit stating your joint income, lenders will usually look at both of your FICO scores when evaluating your loan application. For example if your FICO scores are 750, 730, 700, your middle score is 730. If your spouse has FICO scores of 640, 600, 650, your spouse's middle score is 640. The lender will then take the lower of the two middle scores. So in this example your score is 640 which may lead to higher rates.

Joel Lobb
Mortgage Loan Officer

Individual NMLS ID #57916

American Mortgage Solutions, Inc.

10602 Timberwood Circle 

Louisville, KY 40223

Company NMLS ID #1364

Text/call:      502-905-3708
email:          kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

Text/call 502-905-3708 kentuckyloan@gmail.com

Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant's eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant  Equal Opportunity Lender. NMLS#57916 http://www.nmlsconsumeraccess.org/

-- Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.

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