Why Credit Scores Matter for a Kentucky Mortgage Loan Approval
A key qualifying factor for a Kentucky Mortgage Loan is your credit score. The credit score is used as a key indicator of your ability to manage credit. The reason that credit scores are relied upon so heavily is that it is able to accurately predict whether or not the prospective borrower will be able to uphold their end of debt contract by continuing to make the required payments. And they are able to do that without bias or discrimination.
A credit score derived from a sophisticated and complex numerical calculation that looks at past credit history and payment patterns combined with public records (such as bankruptcy, tax liens, etc). The most commonly referred to formula for credit scoring is the FICO® score. That credit score not only determines your borrowing qualifications for Mortgage Loans, it is also used for credit cards, auto loans and even the cost of automobile insurance. So having a good credit score is pretty important.
Credit scores range from a low of around 400 to a high of around 850. The higher the credit score the more qualified a borrower you are. The average credit score in the US is just under 700 which is considered to be a decent score.
The picture to the right gives you an idea as to how important various aspects of your credit history affect the credit score. Payment history (if you pay on time) has the most impact followed closely by how much money you owe (how much in debt you are).
Credit is not the only thing that a Lender looks at when determining a loan decision. They also look at your income, how long you have been employed, the amount of assets you have and other factors. But credit is probably one of the most important. That is why you should know what is in your credit report and immediate request corrections if there are inaccuracies. You can go to www.annualcreditreport.com and obtain a free credit report.
If you would like more in-depth information on Credit and what you can do to improve your credit score and increase your borrowing power, request your free electronic guide here. We will be happy to provide this information to you.
Whewwwwwwwwwwwwwwwwwwwwwwwwwwww. This can be the bane to every borrower, every loan officer and every lender……and yes, to every realtor. How many times has a borrower said my credit’s good, only to find out that it’s not nearly as good as a borrower thinks or nearly as good as the borrower needs. Big stuff for sure. 620 is the bottom score (again with few exceptions) that lenders will permit. Below a 620, then you’re in a world of hurt. Even at 620, people consider you a higher risk that other folks and are going to penalize you or your borrower with a more expensive loan. 700 is when you really start to get in the “as a lender we love you” credit score. 720 is even better. Watch your credit!!!!! Check out my post:
- Credit Scores for Kentucky VA, FHA, USDA , Fannie Mae Home Loans (louisvillekymortgage.net)
- Credit Scores and the Kentucky USDA Rural Development Loan Program (kentuckyfirsttimehomebuyer.com)
- Lender offers steps to improving credit (kentuckyfirsttimehomebuyer.com)
- Kentucky Mortgage Loans Guidelines 2011 (kentuckyfirsttimehomebuyer.com)
- Credit Scores for Kentucky Mortgages (louisvillemortgageguide.com)