Showing posts with label Fico Scope. Show all posts
Showing posts with label Fico Scope. Show all posts

What is a good FICO Score for Mortgage Loan Approval?

 What is a good FICO Score for Mortgage Loan Approval?


FICO Scores generally range from 300 to 850, where higher scores demonstrate lower credit risk and lower scores demonstrate higher credit risk (note: some types of FICO® Scores have a slightly broader range). 

What’s considered a “good” FICO® Score varies, since each lender has its own standards for approving credit applications, based on the level of risk it finds acceptable. So one lender may offer its lowest interest rates to people with FICO® Scores above 730, while another may only offer it to people with FICO® Scores above 760.

The chart below provides a breakdown of ranges for FICO® Scores found across the U.S. consumer population. Again, each lender has its own credit risk standards, but this chart can serve as a general guide of what a FICO® Score represents.




What is a good FICO Score for Mortgage Loan Approval?

What is a good FICO Score for Mortgage Loan Approval?

Equifax, Experian and TransUnion will also no longer include medical collection debt under at least $500 on credit reports

 Consumer Reporting Agencies to Remove Most Medical Debt From Credit Reports


The three nationwide credit reporting agencies, Equifax, Experian and TransUnion, announced that effective July 1, 2022, they will no longer include medical debt that was paid after it was sent to collections on consumer credit reports.

The companies’ CEOs provided a joint statement on the decision to change their approach to medical collection debt reporting:

“Medical collection debt often arises from unforeseen medical circumstances. These changes are another step we’re taking together to help people across the United States focus on their financial and personal wellbeing,” said Mark W. Begor, CEO Equifax; Brian Cassin, CEO Experian; and Chris Cartwright, CEO TransUnion. “As an industry we remain committed to helping drive fair and affordable access to credit for all consumers.”

The time period before unpaid medical collection debt would appear on a consumer’s report will be increased from 6 months to one year, according to a press release, “giving consumers more time to work with insurance and/or healthcare providers to address their debt before it is reported on their credit file.”

In the first half of 2023, Equifax, Experian and TransUnion will also no longer include medical collection debt under at least $500 on credit reports.

The changes will remove nearly 70% of medical debt in collections accounts from consumer credit reports.

Medical Collections on Credit Report Equifax, Experian, Transunion



Credit Karma DOES NOT give you FICO scores! Which is what mortgage lenders use.

Great information to share with your clients that uses Credit Karma. A lot of people do not know that the Credit Karma app is a Vantage Score.

Credit Karma is NOT Free!
Credit Karma makes money off of the personal information you volunteered!
Credit Karma is NOT a credit monitoring site! - They collect your information from the credit agencies to create targeted campaigns based on your personal information which makes Credit Karma an affiliate marketing site!
Credit Karma DOES NOT give you FICO scores! Which is what mortgage lenders use.
Credit Karma provides you with Vantage scores (Not heavily used by lenders)
Credit Karma buys your information for pennies on the dollar, this is how they are able to provide you with updates every 7 days.
Why?... To get you to look at your scores and their AFFILIATE offers! You know, the offers for those credit cards that say you have a fair, good or very good chance of being approved for....
Have you noticed they never say, "You have a bad or poor chance”?
Apply, get denied and now you have an inquiry on your credit profile.
For those of you that are seeing you have a "chance" of getting approved for an American Express πŸ’³ think again... You would be surprised to know, American Express only pulls from Experian for credit cards?
Credit Karma DOES NOT give you Experian credit report or scores

While it’s common knowledge that mortgage lenders use FICO scores, most people with a credit history have three FICO scores, one from each of the three national credit bureaus (Experian, Equifax, and TransUnion). 


Credit Karma DOES NOT give you FICO scores! Which is what mortgage lenders use. Which FICO Score is Used for Mortgages?



  • Which FICO Score is Used for Mortgages?

Most lenders determine a borrower’s creditworthiness based on FICO® scores, a Credit Score developed by Fair Isaac Corporation (FICO™). This score tells the lender what type of credit risk you are and what your interest rate should be to reflect that risk. FICO scores have different names at each of the three major United States credit reporting companies. And there are different versions of the FICO formula. Here are the specific versions of the FICO formula used by mortgage lenders:

  • Equifax Beacon 5.0
  • Experian/Fair Isaac Risk Model v2
  • TransUnion FICO Risk Score 04

Lenders have identified a strong correlation between Mortgage performance and FICO Bureau scores (FICO score). FICO scores range from 300 to 850. The lower the FICO score, the greater the risk of default.

Which Score Gets Used?

Since most people have three FICO scores, one from each credit bureau, how do lenders choose which one to use?

For a FICO score to be considered “usable”, it must be based on adequate, concrete information. If there is too little information, or if the information is inaccurate, the FICO score may be deemed unusable for the mortgage underwriting process. Once the underwriter has determined if a score is usable or not, here’s how they decide which score(s) to use for an individual borrower:

  • If all three scores are different, they use the middle score
  • If two of the scores are the same, they use that score, regardless of whether the two repeated scores are higher or lower than the third score

Lenders have identified a strong correlation between Mortgage performance and FICO Bureau scores (FICO score). FICO scores range from 300 to 850. The lower the FICO score, the greater the risk of default.

If it helps to visualize this information:

Identifying the Underwriting Score
ExampleScore 1Score 2Score 3Underwriting Score
Borrower 1680700720700
     

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

 

https://www.mylouisvillekentuckymortgage.com/

 

 
 

 

 
 
Joel Lobb
Senior  Loan Officer
(NMLS#57916)
 
 Company ID #1364 | MB73346
 

text or call my phone: (502) 905-3708
email me at kentuckyloan@gmail.com

The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people. NMLS ID# 57916, (www.nmlsconsumeraccess.org). USDA Mortgage loans only offered in Kentucky.

All loans and lines are subject to credit approval, verification, and collateral evaluation

Effective on 9/18/21, Fannie Mae announced that their Automated Underwriting System will now take an AVERAGE of the two scores for qualifying

 

Fannie Mae announced that their Automated Underwriting System will now take an AVERAGE of the two scores for qualifying

Do you and your partner have very different credit scores? Great news! You may have access to more loan program options than you thought!

Here's the deal... All lenders pull FICO scores from each of the three credit bureaus to qualify a borrower. In situations with co-applicants, we will use the lower of the two middle scores for qualifying purposes. Historically, to do a Conventional Loan, both mid-scores would have to be above 620.
Effective on 9/18/21, Fannie Mae announced that their Automated Underwriting System will now take an AVERAGE of the two scores for qualifying. This critical change may help many borrowers qualify and have increased advantages when putting an offer in on a home.
Long story short - we can help you now more than ever. Curious if this will help you? Reach out to me today, and we can investigate.
PS: These changes are effective September 18th, 2021 and there are still a lot of other variables to consider and guidelines are always subject to change. Let's start a conversation today! Message me for more details or to get started.

Fannie Mae announced that their Automated Underwriting System will now take an AVERAGE of the two scores for qualifying
Effective on 9/18/21, Fannie Mae announced that their Automated Underwriting System will now take an AVERAGE of the two scores for qualifying    Fannie Mae announced that their Automated Underwriting System will now take an AVERAGE of the two scores for qualifying Do you and your partner have very different credit scores? Great news!  You may have access to more loan program options than you thought!    Here's the deal... All lenders pull FICO scores from each of the three credit bureaus to qualify a borrower.  In situations with co-applicants, we will use the lower of the two middle scores for qualifying purposes. Historically, to do a Conventional Loan, both mid-scores would have to be above 620. Effective on 9/18/21, Fannie Mae announced that their Automated Underwriting System will now take an AVERAGE of the two scores for qualifying.  This critical change may help many borrowers qualify and have increased advantages when putting an offer in on a home. Long story short - we can help you now more than ever.  Curious if this will help you?  Reach out to me today, and we can investigate. PS: These changes are effective September 18th, 2021 and there are still a lot of other variables to consider and guidelines are always subject to change.  Let's start a conversation today!  Message me for more details or to get started.



Mortgage Application Checklist of Documents Needed below  πŸ‘‡

W-2 forms (previous 2 years)
Paycheck stubs (last 30 days - most current)
Employer name and address (2 year history including any gaps)
Bank accounts statement (recent 2 months – all pages
Statements for 401(k)s, stocks and other investments (most recent)
federal tax returns (previous 2 years)
Residency history (2 year history)
Photo identification for applicant and co-applicant (valid Driver’s License





click on link for mortgage pre-approval


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/


NMLS Consumer Access for Joel Lobb 

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Joel Lobb 

Joel Lobb, American Mortgage Solutions (Statewide)

Joel has worked with KHC for 12 of his 20 years in the mortgage lending business. Joel said, “A lot of my clients would not have been able to purchase a home of their own or possibly delayed their purchase due to lack of down payment but with the $6,000 DAP loan program, this gets them into a house sooner and starts their path to homeownership while building equity instead of throwing their money away.”

When you’re ready to purchase a home in Joel's area, contact him at:
Phone: 502-905-3708
Email: Kentuckyloan@gmail.com
Website: www.mylouisvillekentuckymortgage.com







What credit score do mortgage lenders use?

The best-known credit scores are going to fall under either the FICO or VantageScore brands. There are multiple generations of each score brand, as every few years, the score developers create newer versions. So, for example, there’s a VantageScore 1.0, 2.0, 3.0, and 4.0.

In most lending environments outside of mortgages, it’s hard to know which specific credit score a lender will use to evaluate your application. And, even if you knew your lender used a FICO Score or a VantageScore credit score, you still would not know which generation of the score it is using.

For example, you may apply for an auto loan with one lender that checks your FICO Auto Score 8 based on your Experian credit report. Yet, if you apply for financing with a different auto lender, it may opt to check your VantageScore 3.0 score based on TransUnion data.

The only way to know for sure is to ask the lender which credit report and which credit score version it plans to check, but that isn’t a guarantee that they’ll tell you.

The mortgage industry is different. Because of the aforementioned FHFA mandate, mortgage lenders must use the following versions of FICO’s scoring models:


FICO Model

Description
FICO 9Newest version. Not widely used.
FICO 8Most common. Used for Auto and Bankcard lending.
FICO 5Used by mortgage lenders. Built on data from Equifax.
FICO 4Used by mortgage lenders. Built on data from TransUnion.
FICO 2Used by mortgage lenders. Built on data from Experian.


  • Experian: FICO Score 2, sometimes referred to as FICO V2 or FICO-II
  • TransUnion: FICO Score 4, sometimes referred to as FICO Classic 04
  • Equifax: FICO Score 5, sometimes referred to as BEACON 5.0


Why Do Mortgage Lenders Use Older FICO Scores?

The reason mortgage lenders use older FICO Scores is because they don’t have a choice. They are essentially forced to use them.

Unlike every other industry, mortgage lenders don’t have the flexibility to choose the scoring model brand or generation they want to use. Mortgage lenders must follow the direction of the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, as it pertains to scoring models.

Fannie Mae and Freddie Mac

The GSEs play an important role in mortgage lending. These publicly traded companies buy mortgages from banks, bundle them together, and sell them to investors. This frees up funds so that banks can offer new mortgages to additional homebuyers.

For a bank to sell a mortgage to Fannie Mae or Freddie Mac, the loan has to meet certain guidelines. Some of these guidelines require borrowers to have a minimum credit score under specific FICO Score generations.

If a lender uses a different scoring model other than what the GSEs approve when it underwrites a mortgage, it probably won’t be able to sell that mortgage after it issues the loan. This limits the lender’s ability to write new loans because it will have less money available to lend to future borrowers


Link to article below

https://www.badcredit.org/how-to/which-fico-score-do-mortgage-lenders-use/