How to Get Approved for a Kentucky Mortgage Loan with Bad Credit

Kentucky Mortgage Loans for Bad Credit: Your Path to Homeownership

Quick Summary: Kentucky homebuyers with bad credit can qualify for mortgages with scores as low as 500. FHA, VA, USDA, and KHC programs offer flexible options with down payment assistance available.

Can You Get a Mortgage in Kentucky with Bad Credit?

Yes, absolutely! Despite what many believe, Kentucky mortgage loans for bad credit are not only possible but widely available through specialized loan programs. Over the past 20+ years helping Kentucky families, I've successfully guided more than 1,300 borrowers to homeownership, including many with credit challenges, bankruptcy, or foreclosure in their past.

The key is understanding which Kentucky mortgage programs work best for your specific credit situation and having an experienced loan officer who knows how to navigate the approval process effectively.

Ready to Start Your Kentucky Home Buying Journey?

Get your free mortgage pre-approval with same-day decision!

Call (502) 905-3708 Email Joel Lobb

Best Kentucky Mortgage Programs for Bad Credit

FHA Loans Kentucky - Most Flexible Option

• Minimum Credit Score: 500 with 10% down payment
• Credit Score 580+: Only 3.5% down required
• Down Payment Sources: Accepts gifts, grants, 
• Debt-to-Income: Up to 57% with automated approval
• Best For: First-time buyers, limited savings, credit scores under 620

Why FHA loans are ideal for Kentucky bad credit borrowers: The Federal Housing Administration's flexible guidelines make FHA loans the most accessible option for Kentucky first-time homebuyers with credit challenges. Unlike conventional loans, FHA focuses more on your recent payment history and overall financial picture rather than just your credit score.

Kentucky VA Loans for Veterans

• Credit Requirements: No official minimum (most lenders prefer 620+)
• Possible Approvals: 500 range with strong compensating factors
• Down Payment: $0 required
• Funding Fee: Can be financed into loan
• Best For: Veterans and active military with service eligibility

USDA Rural Housing Loans Kentucky

• Credit Requirements: No official minimum (typically 620-640)
• Down Payment: $0 required
• Income Limits: Must not exceed 115% of area median income
• Property Location: Must be in USDA-eligible areas
• Best For: Rural and suburban Kentucky homebuyers

Conventional Loans Kentucky

• Minimum Credit Score: 620 for 3-5% down
• PMI Removal: Can be removed at 20% equity
• Best For: Borrowers with 720+ scores and stable income and debt ratio under 45% 

Kentucky Housing Corporation (KHC) Down Payment Assistance

One of the biggest advantages for Kentucky bad credit mortgage borrowers is the availability of down payment assistance through KHC programs. These can be combined with FHA, VA, USDA, and conventional loans to reduce your upfront costs significantly.

Current KHC Programs Available:

• KHC First-Time Homebuyer Program: Up to $10,000 in down payment assistance

Important: KHC down payment assistance is still available in 2025, but funding is limited and allocated on a first-come, first-served basis. Contact us immediately to check current availability.

What Credit Scores Qualify for Kentucky Mortgages?

Here's the reality about Kentucky mortgage credit requirements based on 20+ years of experience:

Credit Score Ranges and Options:

• 500-579: FHA loans with 10% down payment
• 580-619: FHA loans with 3.5% down, some VA loan options
• 620-639: All programs available, conventional loans possible
• 640+: Best rates and terms across all programs

Remember, your credit score is just one factor. Lenders also consider your debt-to-income ratio, employment history, assets, and recent credit behavior when making approval decisions.

Overcoming Specific Credit Challenges

Bankruptcy and Kentucky Mortgages

Chapter 7 Bankruptcy: FHA loans available 2 years after discharge, conventional loans after 4 years. VA and USDA loans typically require 2+ years with re-established credit.

Chapter 13 Bankruptcy: May qualify during active repayment plan with court approval and 12+ months of on-time payments.

Foreclosure and Kentucky Home Loans

Previous foreclosure doesn't permanently disqualify you from Kentucky homeownership:

• FHA Loans: 3 years after foreclosure completion
• VA Loans: 2 years with extenuating circumstances
• USDA Loans: 3 years after foreclosure
• Conventional Loans: 7 years (3 years with extenuating circumstances)

Collection Accounts and Charge-Offs

Medical collections under $2,000 are typically ignored by FHA. Other collections may not need to be paid off before closing, depending on the loan program and circumstances.

Get Your Kentucky Bad Credit Mortgage Pre-Approval

Don't let past credit challenges stop you from owning a Kentucky home. Our expert guidance and specialized programs can help you qualify today.

Call Now: (502) 905-3708 Apply Online

Steps to Improve Your Kentucky Mortgage Approval Odds

Before You Apply:

• Review Your Credit Reports: Get free reports from annualcreditreport.com
• Dispute Errors: Challenge any inaccurate information
• Pay Down Credit Card Balances: Aim for under 30% utilization
• Don't Close Old Accounts: Length of credit history matters
• Avoid New Credit Applications: Hard inquiries temporarily lower scores

Gather Required Documentation:

• 2 years of tax returns
• Recent pay stubs (30 days)
• 2 months of bank statements
• Employment verification letter
• Explanation letters for credit events

Why Choose Joel Lobb for Your Kentucky Bad Credit Mortgage?

20+ Years of Kentucky Mortgage Experience

Since starting in the mortgage industry, I've specialized in helping Kentucky families with challenging credit situations achieve homeownership. My experience includes:

• 1,300+ successful Kentucky mortgage closings
• Expertise in all bad credit loan programs
• Strong relationships with KHC and local assistance programs
• Same-day pre-approval decisions
• Personalized guidance throughout the process

Local Kentucky Market Knowledge

Understanding Kentucky's unique housing market and local assistance programs gives my clients significant advantages:

• Knowledge of Kentucky county-specific down payment programs
• Relationships with Kentucky real estate professionals
• Understanding of rural vs. urban property considerations
• Familiarity with Kentucky-specific lending requirements

Ready to Start Your Kentucky Home Purchase?

Joel Lobb - Kentucky Mortgage Loan Officer
NMLS #57916 | EVO Mortgage NMLS #1738461

Phone: (502) 905-3708
Email: kentuckyloan@gmail.com
Website: www.mylouisvillekentuckymortgage.com
Office: 911 Barret Ave., Louisville, KY 40204

Frequently Asked Questions

What's the lowest credit score for a Kentucky mortgage?

FHA loans accept credit scores as low as 500 with a 10% down payment. With a 580+ score, you can qualify with just 3.5% down.

Can I buy a house in Kentucky with a 550 credit score?

Yes, FHA loans are available for 550 credit scores with 10% down payment. VA loans may also be possible for eligible veterans with strong compensating factors.

How long after bankruptcy can I get a Kentucky mortgage?

FHA loans are available 2 years after Chapter 7 discharge. Chapter 13 filers may qualify during active repayment with court approval and 12+ months of payments.

Is down payment assistance available with bad credit in Kentucky?

Yes, KHC down payment assistance programs can be combined with FHA, VA, and USDA loans, even for borrowers with lower credit scores.

What documents do I need for a Kentucky bad credit mortgage?

Standard documentation includes 2 years of tax returns, recent pay stubs, bank statements, and explanation letters for any credit events like bankruptcy or foreclosure.

Take the First Step Toward Kentucky Homeownership

Don't let bad credit keep you from owning a home in Kentucky. With the right program and expert guidance, homeownership is within reach.

Get Your Free Consultation Email Your Questions

Equal Housing Lender. This website is not endorsed by the FHA, VA, USDA, or any government agency. All loan programs subject to credit approval and property eligibility. Interest rates and programs subject to change without notice.

Related Kentucky Mortgage Resources

• Kentucky First-Time Homebuyer Programs
• FHA Loan Requirements Kentucky
• VA Loans Kentucky - Complete Guide
• USDA Rural Housing Loans Kentucky
• Kentucky Housing Corporation Down Payment Assistance

Official Resources:

• FHA Official Website - HUD.gov
• VA Home Loans - VA.gov
• USDA Rural Development
• Kentucky Housing Corporation
• Consumer Financial Protection Bureau

What credit score do mortgage lenders use?

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

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

When applying for a mortgage in Kentucky, it's crucial to understand that lenders utilize specific FICO® score models tailored for mortgage underwriting. These models differ from the scores commonly accessed through consumer credit monitoring services.

FICO® Score Models Used by Kentucky Mortgage Lenders

Mortgage lenders in Kentucky, consistent with industry standards, rely on the following FICO® score versions: mylouisvillekentuckymortgage.com

• FICO® Score 2 – Derived from Experian data

• FICO® Score 4 – Based on TransUnion data

• FICO® Score 5 – Utilizes Equifax dataI  nvestopedia Direct Mortgage Loans

These are collectively known as the "classic" FICO® models and are mandated for use in underwriting loans backed by entities such as Fannie Mae, Freddie Mac, FHA, VA, and USDA

.mylouisvillekentuckymortgage.com+1Louisville Kentucky Mortgage Loans+1

Importance of the Middle Credit Score

Lenders typically obtain a tri-merge credit report, encompassing scores from all three major bureaus. The middle score—the one that falls between the highest and lowest—is used to assess your creditworthiness. For joint applications, the lower middle score between co-borrowers is considered.  

Investopedia+2Louisville Kentucky Mortgage Loans+2kyfirsttimehomebuyer.wordpress.com+2

Discrepancies Between Consumer and Mortgage Credit Scores

It's common for consumers to notice differences between the credit scores they access through services like Credit Karma and those used by mortgage lenders. This is because consumer platforms often provide scores based on models like FICO® 8 or VantageScore 3.0, which are not utilized in mortgage lending. These consumer scores can be 20–40 points higher or lower than the mortgage-specific scores

Strategies to Enhance Your Mortgage Credit Score

To improve your mortgage-specific FICO® scores:

• Maintain Low Credit Utilization: Aim to keep your credit card balances below 30% of your credit limits.

• Limit New Credit Inquiries: Avoid applying for new credit lines 30–60 days before seeking mortgage pre-approval.

• Address Inaccuracies: Dispute any incorrect information on your credit reports directly with the credit bureaus.

• Prioritize Paying Down Revolving Debt: Reducing balances on credit cards can positively impact your scores.

Link to article below

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

Louisville Kentucky Mortgage Lender for FHA, VA, KHC, USDA and Rural Housing Kentucky Mortgages: Disputes on Credit Report and Kentucky Mortgage Lo...

Louisville Kentucky Mortgage Lender for FHA, VA, KHC, USDA and Rural Housing Kentucky Mortgages: Disputes on Credit Report and Kentucky Mortgage Lo...: 

Applying for a Kentucky Mortgage Soon? Don't Dispute that Account       Sounds counterintuitive, I'm sure ...       But until you...

 Got Dispute Comments on Your Credit Report? 

If you've disputed any accounts in the past, chances are your credit report still has dispute comments listed. That might seem harmless—but if you're applying for a mortgage, those comments could delay or even block your loan approval.

 Here’s what you can do:

1. Call each credit bureau (numbers on the graphic).

2. Ask to remove any dispute comments.

3. Verify they’re gone by pulling a fresh consumer credit report.

4. Follow up within 72 hours to confirm it’s been done.

Pro Tip: Do this before your lender pulls your credit. It could save time, stress, and keep your home loan on track.

If you’re not sure where to start, drop a comment or shoot me a message. I’m here to help walk you through the process!

#CreditTips #MortgageReady #HomeLoanHelp #KentuckyMortgage #JoelLobb #CreditRepair #HomebuyerTips #FHA #VA #USDA #KHC #CreditScoreMatters #NMLS57916 #EqualHousingLender

Kentucky Mortgage Credit Scores Used For A Kentucky Mortgage Approval Letter

Which FICO Score Models Matter for Kentucky Mortgage Loans?

FICO® scores are the cornerstone of mortgage approvals, but not all FICO scores are created equal. If you're buying a home in Kentucky—especially using government-backed loans like FHA, VA, or USDA—it's crucial to understand which versions lenders actually use to qualify you.

Understanding the FICO® Scores Used by Mortgage Lenders

When you check your credit score on apps like Credit Karma or your bank, you're likely seeing a version that lenders don’t use for mortgages. These are typically FICO 8 or VantageScore 3.0. Mortgage lenders, on the other hand, use older FICO score versions designed specifically for risk evaluation in home lending.

Which FICO Scores Do Lenders Pull?

Here's what most Kentucky mortgage lenders look at:

• FICO Score 2 (Experian)
• FICO Score 4 (TransUnion)
• FICO Score 5 (Equifax)

These are often referred to collectively as the “classic FICO models” and are used for:

• FHA Loans
• VA Loans
• USDA Rural Housing Loans
• Conventional Loans (via Fannie Mae/Freddie Mac)

Why Is Your Mortgage Score Different Than Credit Karma?

Credit Karma uses VantageScore 3.0, which isn't used in mortgage underwriting. It may show a score that's 20–40 points higher (or lower) than what your lender sees. That’s why getting a lender-pulled tri-merge report is essential before house hunting.

How to Improve the Right FICO Score

• Keep credit card utilization under 30%
• Avoid new hard inquiries 30–60 days before applying
• Dispute inaccurate accounts directly with bureaus (but avoid disputes right before applying)
• Pay down revolving debt first

Get Pre-Qualified with a Mortgage Expert in Kentucky

Ready to check your real mortgage credit scores? Get started with a free pre-qualification from Joel Lobb (NMLS #57916) at EVO Mortgage.

📞 Call or Text: (502) 905-3708
📧 Email: kentuckyloan@gmail.com
🌐 Website: www.kentuckyfirsttimehomebuyer.com

This blog is for educational purposes only. Equal Housing Lender. NMLS #57916 | www.nmlsconsumeraccess.org

FHA Mortgage Manual Underwriting Video Guidelines

Did you know over 50% of our Kentucky  FHA loans are manual underwrites?

 

Kentucky FHA will consider the borrower’s entire story, including extenuating circumstances and compensating factors, to justify loan approvals. If your borrower falls under any of these conditions, they may benefit from manual underwriting:

• Non-traditional credit / lack of credit
• True extenuating circumstances affecting credit or income history
• Lack of seasoning on a Chapter 13
• Disputed accounts over $1,000
• Frequent job changes in the last 12 months

If you think your borrower could benefit from  manual underwriting call us to learn more about manual underwriting or submit your scenario today.

Lowest Minimum Decision Credit Score 

Maximum Qualifying Ratios (%)

 Acceptable Compensating Factors

All manual underwritten loans require a VOR.

If the borrower does not pay rent a letter of explanation from borrower stating where living rent free.

31/43
• No compensating factors required.
• Energy Efficient Homes may have stretch ratios of 33/45.

37/47
One of the following:
• Verified & documented cash reserves equal to at least three total monthly mortgage payments.
• New total monthly mortgage payment is not more than $100 or 5% higher than previous total monthly housing payment, whichever is less; and there is a documented twelve-month housing payment history with no more than one thirty-day late payment.
• Residual Income per VA chart.

40/40
• Borrower has established credit lines in his/her own name (open for at least six months) but carries no discretionary debt (monthly total housing payment is only open installment account and borrower can document that revolving credit has been paid off in full monthly for at least the past six months).

40/50
Two of the following:
• Verified & documented cash reserves equal to at least three total monthly mortgage payments.
• New total monthly mortgage payment is not more than $100 or 5% higher than previous total monthly housing payment, whichever is less; and there is a documented twelve-month housing payment history with no more than one thirty-day late payment.
• Verified and documented significant additional income that is not considered effective income and likely to continue (part-time or seasonal income verified for more than 1 year but less than 2 years). The income if it were included in gross effective income is sufficient to reduce the qualifying ratios to not more than 37/47.
• Residual Income per VA chart.

Residual Income

Calculating Residual Income

Residual income is calculated in accordance with the following:
• Calculate the total gross monthly income of all occupying borrowers
• Deduct from the gross monthly income the following items:
➢ State income taxes
➢ Federal income taxes
➢ Municipal or other income taxes
➢ Retirement or Social Security
➢ Proposed total monthly fixed mortgage payment
➢ All recurring monthly debt obligations
➢ Estimated maintenance and utilities ($0.14 x sq. ft.)
➢ Job related expenses (e.g., child care)

• The difference between the gross monthly income and the deductions above is the residual income

Compensating Factors

Using Residual Income as a Compensating Factor
Count all members of the household of the occupying borrowers without regard to the nature of their relationship and without regard to whether they are joining on title or the note.
Exception: As stated in the VA Guidelines, the mortgagee may omit any individuals from “family size” who are fully supported from a source of verified income which is not included in the effective income in the loan analysis. These Individuals must voluntarily provide sufficient documentation to verify their income to qualify for this exemption.

From the table below, select the applicable loan amount and household size. If residual income equals or exceeds the corresponding amount on the table, it may be cited as a compensating factor.

Accept Risk Class required downgrade to Manual Underwriting

The Mortgagee must downgrade and manually underwrite any mortgage that received an accept or approve/eligible recommendation if:
• The mortgage file contains information or documentation that cannot be evaluated by TOTAL.
• Additional information, not considered in the AUS recommendation affects the overall insurability of the mortgage.
• The borrower has $1,000 or more collectively in Disputed Derogatory Credit Accounts.
• The date of the borrower’s bankruptcy discharge as reflected on bankruptcy documents is within two years from the date of the case number assignment.
• The case number assignment date is within three years of the date of the transfer of title through a Pre-Foreclosure Sale (Short Sale).
• The case number assignment date is within three years of the date of the transfer of title through a foreclosure sale.
• The case number assignment date is within three years of the date of the transfer of title through a Deed-in-Lieu (DIL) of foreclosure.
• The Mortgage Payment history, for any mortgage trade line reported on the credit report used to score the application, requires a downgrade as defined in Housing Obligations/Mortgage Payment History.
• The Borrower has undisclosed mortgage debt that requires a downgrade.
• Business income shows a greater than 20 percent decline over the analysis period.

https://www.hud.gov/sites/documents/fy16_sfhb_mod4_under.pdf

What goes into your FICO® Scores for A Kentucky Mortgage ?

 

What goes into your Kentucky Mortgage FICO®  Scores ?

The FICO® Score is calculated using 5 categories of data:

• 35% Payment history: Whether you've paid past credit accounts on time.
• 30% Amounts owed: The amount of credit and loans you are using.
• 15% Length of credit history: How long you've had credit.
• 10% New credit: Your frequency of credit inquiries and new account openings.
• 10% Credit mix: The mix of your credit cards, retail accounts, installment loans and mortgages.

Your FICO Scores are unique, just like you. They are calculated based on the categories described above, but for some people, the importance of these categories can be different.

Joel Lobb  Mortgage Loan Officer

American Mortgage Solutions, Inc.
10602 Timberwood Circle
Louisville, KY 40223
Company NMLS ID #1364

Text/call: 502-905-3708
fax: 502-327-9119
email: kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

NMLS 57916  | Company NMLS #1364/MB73346135166/MBR1574

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).

Disputes on Credit Report and Kentucky Mortgage Loan Approval?

Applying for a Kentucky Mortgage Soon?

Don't Dispute that Account

     Sounds counterintuitive, I'm sure ...

     But until you've talked to me (or your own local Mortgage Originator), don't even think about disputing an account found on your Credit Report.

     Why?  Unknowingly, you can be creating real problems for your Mortgage Application and Approval. 

     Consider this:  A creditor can refuse to change their disputed rating.  Too many disputed accounts on a Credit Report may result in your loan being denied.

     Is that a really a risk you want to run at such an important time?

     A formal dispute placed on a car loan, student loan, credit card, collection ... or even worse, a mortgage loan ... can cause havoc for your new Mortgage Application.  So ...

     Slow down.  Contact me ... and let's talk.  We'll analyze all your options and see what action is appropriate and in your best interest.  

     What is not commonly known:  Credit Bureaus and Automated Underwriting systems now reflect an evolution that has taken place over the last few years regarding credit disputes.  

     Both the Bureaus and Underwriting systems have been re-worked to recognize disputes as a negative impact and rating on a Borrower's "approvability" or "credit-worthiness".  

     But these changes have taken place without much fanfare and public recognition.  And because of that, hopeful Borrowers have all too often been contributing to the issues faced within their Mortgage Process later.     

     Prospective Mortgage Applicants (and the public in general) must be educated to this fact.  The temptation to dispute an account must be avoided, if hoping to finance a home via a Mortgage Loan soon.       

     If a Creditor offers-up a path to formally dispute your account ... just say no!  At least prior to our talking.

     There may be a better course of action available to you.  During our conversation we'll weigh your options and best course as it pertains to your Mortgage and your Approval.  

     But providing solid, written proof and evidence regarding your stance on the account in question, WITHOUT placing a formal "dispute" on said account is often the most prudent course of action ... 

     Remember:  You must have legitimate data and written proof in order to accomplish your goal successfully.  But when you have that proof, your account can be "re-rated" or the derogatory rating can be deleted from your Credit Report. 

     Any "correction" should come from the Creditor (Credit Card company/bank/etc.) and immediately sent to each of the 3 Credit Bureaus (Experian, TransUnion, Equifax).  

     This final step trips-up way too many, as it's assumed that the Creditor(s) will share the new updated information with the 3 Credit Bureaus.  They may or may not.  

     Bottomline:  It remains YOUR responsibility to inform each of the 3 Bureaus.  

     Play it safe and follow through with this important task, as it's in your best interest to see that it's successfully done.   

     When a correction is reported to the Bureaus, they will, in turn, update your Credit Report.  While each case is different (and I do not represent that all results will be successful or as hoped for) ... you may head off potential issues with your Mortgage Approval by acting pro-actively.  Consult with a Credit Repair Specialist if uncertain of corrective steps to be taken.

     In the modern Mortgage Process, the experience level of the Mortgage Originator you choose can't be understated.  Successful navigation through the steps of addressing credit disputes and credit analysis is just one example of this fact.

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 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). 

• 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
Example	Score 1	Score 2	Score 3	Underwriting Score
Borrower 1	680	700	720	700

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/

 

 

 

—

 

NMLS Consumer Access

 Accessibility Statement

Privacy Policy

 

 

 

Joel Lobb
Senior  Loan Officer

(NMLS#57916)

 

 Company ID #1364 | MB73346

http://mylouisvillekentuckymortgage.com/

 

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