Credit Scores - Everything you need to know

https://www.kyjustice.org/topics/money-debt/credit-reports

USDA LOAN LENDER IN KENTUCKY

KENTUCKY USDA MORTGAGE LOAN INFORMATION 

 

PROGRAM FEATURES FOR USDA LOANS

 

620+ MIN FICO- REFERS AND GUS ACCEPTS!

• 620+ - YES WE DO REFERS!(29/41 MAX RATIOS)U/W DIRECTLY TO RD MANUAL GUIDES
• 620+ GUS ACCEPTS - NO OVERLAYS - follow GUS findings
• 101% LTV of appraised value
• Ratios to 32/44 w/ 620+ and GUS approval w/ comp. factors for debt waiver
• 35% Annual Fee, 1% Guarantee Fee
• We Accept Transfer Appraisals - No Problem on all loans
• File sent to RD within 24 Hours of UW clear!
• File sent to docs within 24 Hours of Receipt of the RD commitment
• Up to 6% seller concessions allowed
• 620+ - GUS Accept - must have 2 trades for 12 months(open/closed) - or manual downgrade

GUS REFERS

• 620- scores OK!
• 29/41 max ratios
• VOR or 12 months cancelled rents checks required
• Tradelines or alt tradelines required
• Medical collections & charge off accounts ignored - consumer collections follow HUD $2000 guidelines (Call us for details!)
• Minimal lates allowed in past 12 months

Kentucky USDA Loans credit score requirements.

Theoretically, Kentucky USDA Loans are not credit score driven. Borrowers with no credit scores are even eligible for this loan program. 

However, most investors that fund USDA Loans want to see a minimum middle credit score of 620. A 640 middle credit score is preferred, since this is the minimum credit score required for a USDA loan to receive an automated underwriting approval through the USDA Guaranteed Underwriting System or GUS. 

Better yet, a borrower with a 680 middle credit score, can obtain a "credit waiver" on all minor derogatory credit items, such as late payments on the credit report and small collection accounts. Borrowers with major credit issues such as bankruptcies, short sales, or foreclosures within the last three years will not be eligible for a USDA Loan regardless of the credit score.

If a borrower has a middle credit score less than 640, the loan request will be manually underwritten. As long as the borrower meets a more rigorous approval process, they still may be eligible for a USDA Loan. Borrowers with a middle credit score less than 640 or have a GUS "Refer" approval will need to ensure that:

• Total debt-to-income ratio for their housing expense cannot exceed 29% of the borrower's gross income, and total debt load including the housing expense cannot 41% of the borrower's gross income or 29%/41%. If the borrower's middle credit score is 680 or higher the debt-to-income ratio can be as high as 32%/44%
• Minimal credit card late payments within the last 12 months
• No accounts placed in collections status within the last 12 months
• All judgment must be paid off for at least 12 months
• Verification of rent or "rent free" letter required

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/

Kentucky First Time Home Buyer Programs For Home Mortgage Loans: Louisville Kentucky Mortgage Lender for FHA, VA, ...

Kentucky First Time Home Buyer Programs For Home Mortgage Loans: Louisville Kentucky Mortgage Lender for FHA, VA, ...: Louisville Kentucky Mortgage Lender for FHA, VA, KHC, USDA and Rural Housing Kentucky Mortgage: Credit Scores Required For A Kentucky Mort...

Credit Scores Required For A Kentucky Mortgage Loan Approval in 2021

 What kind of credit score do I need to qualify for different first time home buyer loans in Kentucky?

Kentucky First Time Home Buyer Programs For Home Mortgage Loans: 5 Sneaky Ways to Improve Your Credit Score - Clark...

Kentucky First Time Home Buyer Programs For Home Mortgage Loans: 5 Sneaky Ways to Improve Your Credit Score - Clark...: 5 Sneaky Ways to Improve Your Credit Score - Clark Howard : There are certain times when it pays to have the highest credit score possible. ...

Kentucky First Time Home Buyer Programs For Home Mortgage Loans: Louisville Kentucky Mortgage Lender for FHA, VA, ...

Kentucky First Time Home Buyer Programs For Home Mortgage Loans: Louisville Kentucky Mortgage Lender for FHA, VA, ...: Louisville Kentucky Mortgage Lender for FHA, VA, KHC, USDA and Rural Housing Kentucky Mortgage: Louisville Kentucky Mortgage Lender for F...

Louisville Kentucky Mortgage Lender for FHA, VA, KHC, USDA and Rural Housing Kentucky Mortgage: We’ve dropped our minimum FICO score to 620 for Ke...

Louisville Kentucky Mortgage Lender for FHA, VA, KHC, USDA and Rural Housing Kentucky Mortgage: We’ve dropped our minimum FICO score to 620 for Ke...: We’ve dropped our minimum FICO score to 620 for Kentucky Mortgage Loan Approvals for FHA, VA, USDA and Conventional Mortgage Loans ...

How are collections on credit report handled for a Kentucky USDA Rural Housing Loan Approval?

Collections on Credit Report and USDA Loan Pre-Approvals

 Underwriting must follow GUS to determine if a collection account must be paid. Typically GUS will require the following:

• If the credit report show a cumulative balance of $2,000 or more for collection accounts: 

1. The debt(s) must be paid in full prior to or at closing, or 
2. Payment arrangements must be made with the creditor and the monthly payment included in the DTI, or 
3. A monthly payment of 5% of the outstanding balances of each collection must be included in the borrower’s DTI.

• While all collections required by GUS must be paid, RHS grants the lender/underwriter the authority to require any collection (whether GUS recommended or not) to be paid prior to or at close. 

Can you get a Kentucky USDA Loan when the borrower has experienced a major negative credit occurrence such as a bankruptcy, foreclosure, or short sale.

The Kentucky USDA Rural Loan program requires a minimum of three years from the date of a bankruptcy, foreclosure, or short sale to the borrower being eligible for a USDA Loan.  For both Chapter 7 and Chapter 13 bankruptcies the borrower must allow three years from the discharge date prior to submitting a new loan request.  If the bankruptcy included a property, whether a primary residence or investment property, the earliest a new loan can be obtained is based on Kentucky USDA Loan short sale and foreclosure guidelines.

When the borrower experienced either a short sale, foreclosure, or surrenders the property through the bankruptcy process, there will be a three year waiting period between the date of property transfer from the borrower to a new entity, and the date the new loan application can be processed.  The most conservative stance by a Kentucky USDA Loan Underwriter for defining the date of the negative occurrence is the legal recorded transfer date, which is the date the property has been transferred out of the borrowers name and either back to the bank that holds the mortgage note or a subsequent home buyer. From this date the borrower will not be eligible for a USDA Loan for a period of time no less than three years.

However, one of my investors will allow a Chapter 7 bankruptcy discharge date to be considered the date of foreclosure, provided the borrower didn't re-affirm the mortgage liability.  This differs from when the property transfer date is recorded at the County Clerks Office. This is especially helpful in circumstances where the home owner legally removed their ownership rights to a property, through a Chapter 7 bankruptcy, but the mortgage lien holder was slow to transfer the mortgage back into the name of the bank or sell the property.

If the foreclosed property was secured by a government backed mortgage loan such as a Kentucky FHA or Kentucky VA Loan, the property transfer date is no longer considered relevant.  The date that now becomes important is the date when the mortgage lender that held the mortgage note received compensation for their mortgage insurance claim through either The Department of Housing and Urban Development for a FHA Loan or The Veterans Administration for a VA Loan.  The date of the mortgage insurance claim is identified through a CAIVRS search, which is required on all Kentucky USDA Loans. We can obtain the CAIVRS number through GUS when we run your loan for pre-approval through the automated underwriting system at USDA .

-- 

Joel Lobb
Mortgage Loan Officer

Individual NMLS ID #57916

American Mortgage Solutions, Inc.

10602 Timberwood Circle 

Louisville, KY 40223

Company NMLS ID #1364

Cell:      502-905-3708
Fax:      502-327-9119

 

Equifax, Experian, and TransUnion will no longer provide information regarding civil judgments and tax liens on reports as of July 1, 2017.

New Credit Report Changes Coming Soon for Kentucky Rural Housing Mortgage USDA  Loans and Fico Scores for 2017

In an effort to make credit reports more accurate, all three credit reporting agencies of Equifax, Experian, and TransUnion will no longer provide information regarding civil judgments and tax liens on reports as of July 1, 2017.  The impact to credit scores is anticipated to be minimal.  There are no changes to the current reporting of foreclosure and bankruptcy data. 

There will be no updates to HB-1-3555 and the following will continue to apply for Single Family Housing Guaranteed Loans:

• Lenders must secure a marketable first lien as required in 7 CFR Part 3555, 3555.204 and HB-1-3555 Chapter 16. 
• USDA’s current policy regarding judgments and tax liens in 3555.151(i)(5) and HB-1-3555 Chapter 10:  10.10 and Attachment 10-B will apply. 
• If a lender identifies a judgment or tax lien for a GUS “Accept” loan file, the manual entry of the debt on the “Assets and Liabilities” application page will not require the file to be downgraded.  The GUS “Accept” recommendation remains valid and the lender must appropriately underwrite the loan file under the requirements of 7 CFR 3555 and HB-1-3555. 

USDA will continue to monitor the performance of guaranteed loans to determine if any future policy changes may be necessary.

Kentucky USDA Rural Housing Credit Requirements for 2016

KY USDA AND RURAL HOUSING UPDATED CREDIT REQUIREMENTS FOR 2016.

CREDIT SCORE

If more than one score is supplied by the same repository, the lesser of the scores will be used. Determining Qualifying Credit Score: Middle of 3 Lower of 2 If only one score is provided, the loan is ineligible  Minimum credit score for: GUS Approval = 640

• Credit report must match GUS findings.
• Must not be older than 120 days on the date of closing for existing properties and new construction.
• Must contain complete information provided by all three repositories.
• The credit report must show the following three required FICO scoring models for the report to be valid with us.
• 
  
  1. Equifax Beacon 5.0
  2. Transunion FICO Risk Score, Classic 04
  3. Experian/Fair Isaac Risk Model V2.
• Must reflect a minimum of 2 scores per borrower.

TRADELINE REQUIREMENT:

At least one applicant whose income or assets are used for qualification must have at least 2 historical trade line payment references that have existed for at least 12 months to establish a credit reputation and validate the credit score.

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. Some guidelines that USDA published may not be a strict as the one's above so you can check with other USDA Mortgage Lenders offer the 502 Guaranteed Loan in Kentucky to see if you qualify. 

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/

What is the minimum credit score profile for a Kentucky RHS Loan?

Credit Profile:

• Minimum risk score of 640 for each borrower for full documentaion.
• Minimum risk score of 640 for each borrower for streamline transactions.
• The borrower must have two credit scores to be eligible. However, GUS may accept borrowers with only one score.
• Any loan that does not receive an Accept recommendation from GUS must be accompanied by a credit waiver from USDA. Supporting documentation may be required by USDA unless the loan receives an Accept recommendation from GUS Manually underwritten loans and GUS loans that receive a “Refer” underwriting recommendation approved for borrower(s) with eligible FICO scores of 640 and above do not require submission of supporting documentation to Rural Development.
  • If the underwriter deems the adverse credit acceptable then the underwriter should document their decision on the Uniform Underwriting Transmittal Summary (Fannie Mae Form 1008/Freddie Mac Form 1077) in the "Underwriter Comments" section. Adverse credit examples include outstanding collections, recent late pays in the last 12 months, etc.
  • If the underwriter approves an adverse credit waiver, the lender must secure documentation evidencing that the circumstances surrounding the adverse information were temporary in nature, and were beyond the applicant's control, and have been removed so its reoccurrence is unlikely.
• Applicants with an Accept recommendation from GUS or a credit score of 640 and above without any major derogatory credit in the previous 36 months does not require rental history documentation. Otherwise, satisfactory rental history for the most recent 12 months is required.