I specialize in Kentucky First Time Homebuyers FHA, VA, USDA & Rural Housing, KHC and Fannie Mae mortgage loans. I have helped over 900 Kentucky families buy their first home and refinance their current mortgage for a lower rate; Kentucky First time buyers $0 down still available with down payment assistance with KHC. Free Mortgage applications same day approvals. Web site is not endorsed by the FHA, VA, USDA govt agency. Text/call 502-905-3708 kentuckyloan@gmail.com NMLS 57916 NMLS ID 1364
Showing posts with label FHA minimum credit score. Show all posts
Showing posts with label FHA minimum credit score. Show all posts
Kentucky FHA Mortgage Loans
Kentucky FHA Loan Requirements For 2022
How to Qualify for a Kentucky FHA Mortgage Loan with a lender?
I have helped over 1300 Kentucky families buy or refinance their home over the last 20 years. Realizing that this is one of the biggest, most important financial transactions a family makes during their lifetime, I always feel honored and respected when I am chosen to originate their personal home loan. You can count on me to deliver on what I say, and I will always give you honest, up-front personal attention you deserve during the loan process.
I have several advantages over the large banks in town. First, I can search and negotiate for your loan options through several different mortgage companies across the country to get you the best deal locally. Where most banks will offer offer you their one set of loan products. I have access to over 10 different mortgage companies to broker your loan through to get you the best pricing and loan products that may not fit into the bank's program due to credit, income, or other underwriting issues.
You will not get lost in the shuffle like most borrowers do at the mega banks; you're just not a number at our company, you are a person and we will treat you like one throughout the entire process.
Kentucky FHA Mortgage Guidelines in Video
Joel Lobb
Mortgage Loan Officer
Mortgage Loan Officer
Individual NMLS ID #57916
American Mortgage Solutions, Inc.
fax: 502-327-9119
email: kentuckyloan@gmail.com
email: kentuckyloan@gmail.com
I have helped over 1300 Kentucky families buy or refinance their home over the last 20 years. Realizing that this is one of the biggest, most important financial transactions a family makes during their lifetime, I always feel honored and respected when I am chosen to originate their personal home loan. You can count on me to deliver on what I say, and I will always give you honest, up-front personal attention you deserve during the loan process.
I have several advantages over the large banks in town. First, I can search and negotiate for your loan options through several different mortgage companies across the country to get you the best deal locally. Where most banks will offer offer you their one set of loan products. I have access to over 10 different mortgage companies to broker your loan through to get you the best pricing and loan products that may not fit into the bank's program due to credit, income, or other underwriting issues.
You will not get lost in the shuffle like most borrowers do at the mega banks; you're just not a number at our company, you are a person and we will treat you like one throughout the entire process.
What is a Good Credit Score for a Kentucky FHA, VA, USDA, Fannie Mae Conventional KHC Mortgage Loan Approval?
What is a Good Credit Score
Text/call: 502-905-3708
email: kentuckyloan@gmail.com
What is a Good Credit Score?
An established credit history and credit score often stands between potential home or car buyers and their dream. But What is a good credit score? What exactly is a credit score? What makes a credit score “good?” How to improve your credit score? If you’re new to building credit there are a few things you need to know in order to keep your credit looking stellar.
What is a credit score?
Your credit score is a numerical representation of your credit report. This three-digit number is like a badge that predicts risk, credit responsibility and determines your interest rates if you borrow money from lenders much like your CLUE Report. While you will be able to get a copy of your credit report you may not find this numerical key listed. Think of your credit score like the cliff notes version of your credit report. There are a few different measures of credit scores between divisions. Based on their own systems different scorers might view certain numbers in many ways.
Your credit score is a numerical representation of your credit report. This three-digit number is like a badge that predicts risk, credit responsibility and determines your interest rates if you borrow money from lenders much like your CLUE Report. While you will be able to get a copy of your credit report you may not find this numerical key listed. Think of your credit score like the cliff notes version of your credit report. There are a few different measures of credit scores between divisions. Based on their own systems different scorers might view certain numbers in many ways.
what is a good credit score
Deciphering your three-digit credit score is quite easy if you know the levels. The range usually runs from 300-850. Good to excellent credit is considered anything from 700 to 850. If your credit score falls in this range you’re going great! Fair credit runs from 625-699, poor runs from 550-624, and anything below 550 is bad. Some finance experts would classify anything over 720 a good credit rating. Experts will disagree depending on their preferred credit rating systems, and in most cases the criteria you use to determine whether or not your credit score is good will not be far off.
What Does a Good Credit Score Mean?
Having a good credit score is great, but if you don’t know how to use it you could be missing out on some crucial credit building. Credit scores are used in varying ways by lenders and banks. One thing your credit score implies is how likely you are to pay back debt. Basically it announces how reliable you are as a borrower. People with good credit scores are more likely to pay back funds that they borrow while those with lower scores aren’t so reliable. Lenders like reliable borrowers, and good credit points them out.
Having a good credit score is great, but if you don’t know how to use it you could be missing out on some crucial credit building. Credit scores are used in varying ways by lenders and banks. One thing your credit score implies is how likely you are to pay back debt. Basically it announces how reliable you are as a borrower. People with good credit scores are more likely to pay back funds that they borrow while those with lower scores aren’t so reliable. Lenders like reliable borrowers, and good credit points them out.
But a credit score does much more than predict whether or not you’ll pay a loan back. When it comes to buying a house or car, there is an interest charge. Higher credit scores usually have a lower interest rate than those with bad to fair credit. Lenders not only base whether or not they’ll approve a loan by your credit score, but also how much interest to charge. If your credit is in good standing your interest rate won’t be as high as someone with bad credit. Your credit score saves you money with lower interest rates.
How is a Credit Score Calculated?
In order to build and maintain good credit you must first know how your score is determined. Once you know what goes into a credit score you can begin building your credit or nursing your score towards higher digits. Credit scores are based on your financial history only, and laws prevent your score being affected by things like race, gender, age and where you live. What is included are items such as your payment history, your current credit debts, age of your credit history, new credit items added to your accounts and types of credit used.
In order to build and maintain good credit you must first know how your score is determined. Once you know what goes into a credit score you can begin building your credit or nursing your score towards higher digits. Credit scores are based on your financial history only, and laws prevent your score being affected by things like race, gender, age and where you live. What is included are items such as your payment history, your current credit debts, age of your credit history, new credit items added to your accounts and types of credit used.
These five basic areas are where the bulk of your credit score is formed. All criteria have varying degrees of involvement in your score. For example:
- Payment history (35%) – How many on-time payments you’ve made, missed, defaulted and past due items
- Current amount owed (30%) – How much you currently owe – if you owe a large amount this could negatively affect your score
- Age of credit history (15%) – The average length of your credit accounts and time since last activity
- New credit (10%) – The number of new credit items on your accounts
- Types of credit (10%) – The kinds of credit accounts are you currently maintain
How to Improve Your Credit Score?
Many people avoid credit based on all the negatives they’ve heard against it, but neglecting your credit score hurts your chances of being able to make major purchases in the future. The best way to build credit is to use credit, and forming the following good credit habits early will pull your low score to higher ground.
Many people avoid credit based on all the negatives they’ve heard against it, but neglecting your credit score hurts your chances of being able to make major purchases in the future. The best way to build credit is to use credit, and forming the following good credit habits early will pull your low score to higher ground.
- Pay bills on time – This is the easiest and best way to boost your credit score. Since the bulk of your credit score comes from your payment history, paying bills on time will pull you up quickly. Not only will that help, but a recent and consistent history of paying bills on time overshadow a period long in the past where you may have missed payments.
- Budget – Setting up a budget and staying within its parameters will keep you from overspending and using credit for frivolous things. Although using credit builds credit not being able to pay it off hurts more in the future.
- Use all your credit cards regularly – If you have a few credit cards try to use them from time to time in order to show that you use all of your accounts. Remember that the last usage of an account is 15% of your score.
Track a key aspect of your financial profile with your personal FICO® Score history graph. Simply navigate over any point of your score history and view the date the score was calculated. Check back each month to stay on top of changes.
Important items to note:
- We may not receive a new score for you each month. You won’t see a score if we did not receive one for a given month.
- Remember, FICO® Scores are based on data in your credit report, so changes to your score may be a result of changes in your credit report. You can request a free annual credit report from Equifax at www.annualcreditreport.com.
Please refer to our FAQs or Useful Links sections for more information.
FICO® Scores: What You Need to Know
Score Deciding Factors
35% payment history, 30% amount you owe, 15% length of credit history, 10% new credit opened, 10% type of credit.
When it comes to getting a home loan, does your credit report and credit score really matter? Can you use the free credit score you got off the internet to apply for a loan? What if your credit score is low, can you get a mortgage? What if it is high, will you get a better interest rate? And what the heck is FICO?
So many questions. You’ve searched the internet and are still confused. If you are new to getting a mortgage and are overwhelmed by understanding your credit score you are not alone. Your credit score has a big impact on your ability to qualify for a loan and get a favorable interest rate. Therefore, you should take the time now to understand it.
Here’s the good news. We’re here to explain things simply and clearly. Step by step we will walk you through all things credit. When we’re done, you’ll know what you need to know to understand how credit impacts your ability to get a mortgage so you can make smart home buying decisions.
Below are the important items we will discuss:
- What is a credit report?
- What do mortgage lenders use to determine my credit score?
- What does FICO stand for?
- What determines my FICO score?
- What’s a good FICO score?
- What if my FICO score is below 620?
- Can I get a copy of my credit report?
- Ah Ha! Now I understand all things credit and I’m this much closer to owning my home!
What is a credit report?
A credit report record’s your credit history including information about:
- Your identity: name, social security number, date of birth and possibly employment information.
- Your existing credit: credit card accounts, mortgages, car loans, students loans etc.including credit terms, how much you owe, and your payment history.
- Your public record: Judgments against you, tax liens or bankruptcies.
- Recent Credit Inquiries: Requests for your information from companies extending credit such as credit card companies, auto loans, etc.
Be aware, credit card companies, car companies and mortgage lenders use slightly different models to determine credit risk. Today we are focusing on Mortgage related credit.
How do lenders calculate my credit score?
Your credit score is the key to your castle. Your home is most likely the most expensive purchase you will ever make. Therefore, when buying a home, lenders use a different system for assessing risk than credit card companies or even auto loan companies use.
Mortgage lenders use a comprehensive system of checking credit called a Residential Mortgage Credit Report (RMCR), commonly called a “Tri-Merge” report. The RMCR report combines your three credit reports from the three national credit bureaus, Equifax, Experian, and TransUnion. Each credit reporting agency calculates your credit score or FICO Score differently. Therefore, pulling from all three bureaus gives lenders a more complete picture of your credit behavior.
Once pulled, lenders use the average of these three scores, usually the middle score, to determine loan qualification and interest rate. For example, if Equifax gives you a 720, Experian a 730 and TransUnion a 740, the lender will use the 730 FICO Score to help determine the terms of your mortgage. If you are applying for a loan jointly, your partner’s three reports will also be pulled.
What does FICO stand for?
FICO stands Fair, Isaac and Company. Over 25 years ago, lenders began using FICO’s scoring model, or algorithm, to fairly and more accurately determine a person’s credit risk. Since it’s inception, FICO’s continually updates its’ algorithms to reflect more current lending trends and consumer behaviors. Today, FICO Scores are used by over 90% of enders. Importantly, your FICO score can impact your loan interest rates, terms, approvals and more.
What determines my FICO score?
A Mortgage FICO score is determined by an algorithm that generally looks at five credit factors including payment history, current level of indebtedness, types of credit used, length of credit history and new credit accounts.
What’s a good FICO score?
To qualify for a conventional loan, most Mortgage lenders require a FICO score of 620+. The best interest rates go to borrowers with a 740+ FICO score. For each 40 point drop, borrowers can expect to see a slightly higher interest rates by about 0.2 percentage points. If a borrower drops below 660, the increase is likely to be twice as big, a 0.43 percentage point increase. If your credit score is below 620, it is very difficult to get a conventional loan in today’s marketplace. However, don’t be discouraged. You may still be able to buy a home.
What if my FICO or credit score is below 620?
If your score is below 620, you may still be able to buy a home. There are several options:
- Put more money down. Some lenders offset a weak credit score with a higher down payment. A higher down payment gives you more equity in your home, lowering the lender’s risk.
- You may qualify for a non conventional government issued loan such as an FHA, Veterans Affairs and/or U.S. Department of Agriculture loan which have less stringent lending requirements.
- You may work to get that credit score up!
- Correct any errors on your report. Analyze your credit items line by line. If you notice a mistake, dispute it right away with either the credit bureau providing the report or the company that providing the incorrect information to the credit bureau.
- Make all your payments on time. Late payments are the No. 1 way to lower your credit score.
- Pay down revolving debt. Keeping your credit balances low helps to raise your score.
- Sit back and relax. As long as you're paying down debt and making payments on time, your credit score will eventually rise on its own.
Can I get a copy of my credit report after a lender has pulled it?
Yes! In fact, you can get one free credit report every twelve months from each of the nationwide credit bureaus—Equifax, Experian, and TransUnion. You may also purchase your credit score at any time from any of the credit bureaus. Some Mortgage lenders will tell you your score when you apply for a loan or even give you a copy of your report but they are not required to do so. However, if a lender denies you credit, under the Fair Credit Reporting Act (FCRA) you are entitled to a free copy of your personal credit report if you have received notice that in the past 60 days you have been declined credit
Joel Lobb
Mortgage Loan Officer
Mortgage Loan Officer
Individual NMLS ID #57916
American Mortgage Solutions, Inc.
10602 Timberwood Circle
Louisville, KY 40223
Company NMLS ID #1364
email: 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.
I have helped over 1300 Kentucky families buy or refinance their home over the last 20 years. Realizing that this is one of the biggest, most important financial transactions a family makes during their lifetime, I always feel honored and respected when I am chosen to originate their personal home loan. You can count on me to deliver on what I say, and I will always give you honest, up-front personal attention you deserve during the loan process.
I have several advantages over the large banks in town. First, I can search and negotiate for your loan options through several different mortgage companies across the country to get you the best deal locally. Where most banks will offer offer you their one set of loan products. I have access to over 10 different mortgage companies to broker your loan through to get you the best pricing and loan products that may not fit into the bank's program due to credit, income, or other underwriting issues.
You will not get lost in the shuffle like most borrowers do at the mega banks; you're just not a number at our company, you are a person and we will treat you like one throughout the entire process.
What is an FHA Loan and Is It Right for You?
What is an FHA Loan and Is It Right for You?
The Federal Housing Administration insures what are called FHA loans. These mortgage loans provide opportunities for buyers with less-than-perfect credit or limited down payments to purchase homes, but they aren’t without potential pitfalls.
FHA loans are available to borrowers with a credit score of at least 580, and you have to make a minimum 3.5% down payment. They’re a popular option for first-time home buyers.
Lenders such as banks and credit unions issue the mortgages, which are insured by the FHA. That protects the lender if the borrower defaults, which is why the terms are more favorable than a traditional mortgage.
Around eight million single-family homes have loans insured by the FHA.
What Can an FHA Loan be Used For?
You can use an FHA loan to refinance single-family houses, to buy a single-family home, to buy some multifamily homes and condos and certain mobile and manufactured homes. There are particular types of FHA loans that can be used to renovate an existing property or for new construction.
How is an FHA Loan Different from a Conventional Mortgage Loan?
The biggest differentiator between an FHA loan and a conventional mortgage is that it’s easier to qualify for an FHA loan. You may get a loan with a lower credit score than you would otherwise, and your mortgage insurance payments may be lower too.
There are also fewer restrictions as far as using gifts from family or donations for your down payment.
If you have a FICO score of at least 580, you have to make a 3.5% down payment. With a FICO score between 500 and 579, you’re required to make a 10% down payment, and mortgage insurance is required. Your debt-to-income ratio needs to be less than 43% whereas with a conventional loan it’s usually 36%. You do need to have proof of income and steady employment, as you would need with a conventional loan.
Are There FHA Loan Limits?
There are limits on the mortgage amount you can get with an FHA-guaranteed loan. The limits vary based on your county, and in 2020 these ranged from $331,760 to $765,600. The limit amounts are updated by the FHA each year based on fluctuations in home prices.
The Benefits of the FHA Loan
The primary benefits of an FHA loan are that buyers who wouldn’t otherwise qualify may be able to own a home and for a lower down payment. Sometimes the FHA will help facilitate coverage of closing costs. If you have problems making payments on an FHA loan you may be eligible for a forbearance period if you qualify.
What Are the Downsides of an FHA Loan?
You will have to pay an upfront mortgage insurance premium with an FHA loan to protect the lender. The fee is due when you close and it’s 1.75% of your loan. You will also have to pay an annual mortgage insurance premium for the life of your loan. The amount can range between 0.45% and 1.05%.
When you buy a home with an FHA loan, it has to meet strict standards in terms of health and safety.
Also, while there are set standards from the FHA, approved lenders can create their own requirements.
Applying for an FHA Loan
You’ll have to first find an FHA-approved lender to get one of these home loans. You’ll need some documents, including proof of U.S. citizenship, legal permanent residency, or eligibility to work in America. You’ll need bank statements for at least the past 30 days, and you’ll probably need to show pay stubs.
Some of the information your lender may be able to obtain on your behalf, such as your credit reports, tax returns and employment records.
There are advantages to an FHA loan because it expands homeownership to more people than conventional loans. It’s just important that if you’re considering this loan you understand the costs and that you’re not taking on more than you’re financially prepared for because of the less stringent approval requirements.
Written by Ashley Sutphin for www.RealtyTimes.com Copyright © 2020 Realty Times All Rights Reserved.
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Joel Lobb
Mortgage Loan Officer Individual NMLS ID #57916
American Mortgage Solutions, Inc.
Text/call: 502-905-3708 fax: 502-327-9119
|
I have helped over 1300 Kentucky families buy or refinance their home over the last 20 years. Realizing that this is one of the biggest, most important financial transactions a family makes during their lifetime, I always feel honored and respected when I am chosen to originate their personal home loan. You can count on me to deliver on what I say, and I will always give you honest, up-front personal attention you deserve during the loan process.
I have several advantages over the large banks in town. First, I can search and negotiate for your loan options through several different mortgage companies across the country to get you the best deal locally. Where most banks will offer offer you their one set of loan products. I have access to over 10 different mortgage companies to broker your loan through to get you the best pricing and loan products that may not fit into the bank's program due to credit, income, or other underwriting issues.
You will not get lost in the shuffle like most borrowers do at the mega banks; you're just not a number at our company, you are a person and we will treat you like one throughout the entire process.
We’ve dropped our minimum FICO score to 620 for Kentucky Mortgage Loan Approvals
Now that’s refreshing!
Call me today to qualify your borrowers with one of our great programs:
KENTUCKY FHA MORTGAGE LOANS
Minimum credit score
620 AUS approved
640 manual
Non-Credit Qualifying Streamline refinances allowed
Gift funds allowed for down payment and closing costs
Cash out 80% LTV
KENTUCKY VA MORTGAGE LOANS
Minimum credit score
620 AUS approved
640 manual/640 High BA
Cash-out up to 90% LTV
Foreclosure/Short Sale/Bankruptcy <2 allowed="" approval="" aus="" p="" with="" years="">
KENTUCKY RURAL USDA MORTGAGE LOANS
Minimum credit score: 620
100% maximum LTV
Manual Underwrites
No maximum loan amount
Rate/Term refinances allowed
KENTUCKY CONVENTIONAL MORTGAGE LOANS
620 min score
Fannie Mae
Freddie Mac
Standard and High Balance
HomeReady
HomePossible
Joel Lobb
Mortgage Loan Officer
Mortgage Loan Officer
Individual NMLS ID #57916
American Mortgage Solutions, Inc.
fax: 502-327-9119
email: kentuckyloan@gmail.com
email: kentuckyloan@gmail.com
I have helped over 1300 Kentucky families buy or refinance their home over the last 20 years. Realizing that this is one of the biggest, most important financial transactions a family makes during their lifetime, I always feel honored and respected when I am chosen to originate their personal home loan. You can count on me to deliver on what I say, and I will always give you honest, up-front personal attention you deserve during the loan process.
I have several advantages over the large banks in town. First, I can search and negotiate for your loan options through several different mortgage companies across the country to get you the best deal locally. Where most banks will offer offer you their one set of loan products. I have access to over 10 different mortgage companies to broker your loan through to get you the best pricing and loan products that may not fit into the bank's program due to credit, income, or other underwriting issues.
You will not get lost in the shuffle like most borrowers do at the mega banks; you're just not a number at our company, you are a person and we will treat you like one throughout the entire process.
KENTUCKY FHA LOAN CREDIT SCORE REQUIREMENTS
What credit score do I need to qualify for Kentucky FHA loan is one of the most common questions lenders hear. The short answer is you must have a minimum credit score of 500 to be eligible for an Kentucky FHA loan. Higher scores will get you better terms and a smaller down payment requirement. Anything lower than 500 disqualifies you from consideration for an Kentucky FHA loan.
There are two sets of credit score requirements.
One important thing to understand is that the Federal Housing Administration (FHA) does not lend money directly to home buyers. You will fill out an application with a regular lender just as you would if you were applying for any other type of mortgage. What the FHA does is ensure your loan to help protect the lender in case you default. You will be required not only to meet the FHA guidelines to qualify for a loan but also meet any additional qualifications required by the lender. This means there are two sets of requirements you have to meet with your credit score.
1. The first set of requirements comes from the Department of Housing and Urban Development (HUD). HUD oversees the FHA and determines what a borrower’s minimum eligibility requirements will be to obtain an FHA loan.
2. The second set of requirements comes from the mortgage lender. The mortgage lender has the right to add its requirements to those mandated by HUD.
What HUD requires of borrowers to be eligible for an FHA loan
The HUD Handbook 4000.1 includes the official guidelines when it comes to the FHA mortgage insurance program.
It states that in 2020 the borrowers with credit scores of 580 or higher are eligible for a 96.5% loan with 3.5% down.
Borrowers with credit scores from 500 to 579 are eligible for a 90% loan with 10% down.
Individuals with credit scores below 500 are not eligible for the FHA program.
What lenders may require of borrowers to be eligible for an FHA loan
Lenders have the right to add requirements over and above the minimum requirements of HUD. These additional requirements are called overlays. Your lender may or may not require them. This is not something that should come as a surprise to you, however. Requiring a credit score of 580 to 620 is not unusual. In addition to your credit score, you must have a manageable debt level that lenders are comfortable with and enough income to repay your loan.
What credit score do I need to qualify for FHA loan?
These percentages show that the majority of borrowers who successfully qualify for FHA loans fall into the 600 to 799 range. While it is true that some successfully qualify in the low range of 500 to 599, you have a much better chance of being approved for a loan with good terms and a low down payment if you fall into the higher range.
I have helped over 1300 Kentucky families buy or refinance their home over the last 20 years. Realizing that this is one of the biggest, most important financial transactions a family makes during their lifetime, I always feel honored and respected when I am chosen to originate their personal home loan. You can count on me to deliver on what I say, and I will always give you honest, up-front personal attention you deserve during the loan process.
I have several advantages over the large banks in town. First, I can search and negotiate for your loan options through several different mortgage companies across the country to get you the best deal locally. Where most banks will offer offer you their one set of loan products. I have access to over 10 different mortgage companies to broker your loan through to get you the best pricing and loan products that may not fit into the bank's program due to credit, income, or other underwriting issues.
You will not get lost in the shuffle like most borrowers do at the mega banks; you're just not a number at our company, you are a person and we will treat you like one throughout the entire process.
How Do Mortgage Companies Average the Score on All 3 Credit Reports?
How Do Mortgage Companies Average the Score on All 3 Credit Reports?
Your credit score measures your risk of paying late or defaulting on a loan. Lenders use credit scores along with the rest of your loan information to measure your likelihood of paying back the debt on time. Credit scores allow mortgage companies to use software programs called automated underwriting systems, or AUS, to determine if the amount of risk is acceptable for the loan program requested.
The three major credit bureaus are Equifax, Experian and TransUnion. Lenders are encouraged to report loans and payment history to the credit bureaus on a monthly basis. When companies need to examine a potential borrower's payment history, they buy a credit report using the borrower's name, address and Social Security number. Each credit bureau calculates the credit score differently. This is why the exact same information can be on all three credit reports and they all report a different credit score.
Many factors affect your credit score. Making your payments on time every month is one important factor. Payments made more than 30 days late will lower your credit score. Collections, judgments, tax liens, bankruptcy and foreclosure can have devastating effects on your credit score. Each time you authorize someone to look at your credit that can lower your credit score as well.
One misconception is the belief that paying off credit cards will raise your credit score. The credit bureaus want to see your ability to manage ongoing credit without missing payments or using the entire credit line. Pay down your credit cards so the balances are between 30 to 45 percent of the total available credit line. The older the credit line, the better. If you close a credit card, close the newest ones first and keep the older ones.
Mortgage lenders require access to all three credit bureaus for each borrower. They use the mid-credit score. If your three scores were 780, 776 and 790 they would use the middle of the three scores, in this case 780. They would not average the scores by adding the three numbers together and dividing the sum by three.
In January 2010, the Federal Housing Authority, or FHA, began requiring a minimum 580 credit score for any FHA loan with less than a 10 percent down payment or equity if the loan is a refinance. Conventional loans require a minimum credit score of 620. Lenders are allowed to require their own minimum credit score requirements beyond what the mortgage investors and insurers require. Having the required score does not guarantee loan approval; it is only one factor that lenders consider when approving a loan.
References
Consumer Federation of America: Your Credit Scores
Credit Report.com: Credit Scores
Consumer Credit Help: Do They Add All Three Credit Score Points Together?
Your credit score measures your risk of paying late or defaulting on a loan. Lenders use credit scores along with the rest of your loan information to measure your likelihood of paying back the debt on time. Credit scores allow mortgage companies to use software programs called automated underwriting systems, or AUS, to determine if the amount of risk is acceptable for the loan program requested.
Credit Bureaus
The three major credit bureaus are Equifax, Experian and TransUnion. Lenders are encouraged to report loans and payment history to the credit bureaus on a monthly basis. When companies need to examine a potential borrower's payment history, they buy a credit report using the borrower's name, address and Social Security number. Each credit bureau calculates the credit score differently. This is why the exact same information can be on all three credit reports and they all report a different credit score.
Factors that Affect Credit Scores
Many factors affect your credit score. Making your payments on time every month is one important factor. Payments made more than 30 days late will lower your credit score. Collections, judgments, tax liens, bankruptcy and foreclosure can have devastating effects on your credit score. Each time you authorize someone to look at your credit that can lower your credit score as well.
Raising Your Credit Score
One misconception is the belief that paying off credit cards will raise your credit score. The credit bureaus want to see your ability to manage ongoing credit without missing payments or using the entire credit line. Pay down your credit cards so the balances are between 30 to 45 percent of the total available credit line. The older the credit line, the better. If you close a credit card, close the newest ones first and keep the older ones.
Finding the Middle Score
Mortgage lenders require access to all three credit bureaus for each borrower. They use the mid-credit score. If your three scores were 780, 776 and 790 they would use the middle of the three scores, in this case 780. They would not average the scores by adding the three numbers together and dividing the sum by three.
Minimum Credit Score Requirement
In January 2010, the Federal Housing Authority, or FHA, began requiring a minimum 580 credit score for any FHA loan with less than a 10 percent down payment or equity if the loan is a refinance. Conventional loans require a minimum credit score of 620. Lenders are allowed to require their own minimum credit score requirements beyond what the mortgage investors and insurers require. Having the required score does not guarantee loan approval; it is only one factor that lenders consider when approving a loan.
References
Consumer Federation of America: Your Credit Scores
Credit Report.com: Credit Scores
Consumer Credit Help: Do They Add All Three Credit Score Points Together?
I have helped over 1300 Kentucky families buy or refinance their home over the last 20 years. Realizing that this is one of the biggest, most important financial transactions a family makes during their lifetime, I always feel honored and respected when I am chosen to originate their personal home loan. You can count on me to deliver on what I say, and I will always give you honest, up-front personal attention you deserve during the loan process.
I have several advantages over the large banks in town. First, I can search and negotiate for your loan options through several different mortgage companies across the country to get you the best deal locally. Where most banks will offer offer you their one set of loan products. I have access to over 10 different mortgage companies to broker your loan through to get you the best pricing and loan products that may not fit into the bank's program due to credit, income, or other underwriting issues.
You will not get lost in the shuffle like most borrowers do at the mega banks; you're just not a number at our company, you are a person and we will treat you like one throughout the entire process.
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