Understanding Mortgage Credit Scores in Kentucky

Important: Mortgage lenders use FICO mortgage score models (FICO 2, 4, 5), not the VantageScore results you see on Credit Karma or free credit monitoring apps. This can mean a difference of 20-50+ points.

🧮 Quick Credit Score Assessment

Credit Score Requirements by Program

  • 🏠 Conventional Loans (Fannie Mae/Freddie Mac)
    Minimum: 620 for automated approval
    Best rates: 740+ credit score
    Down payment: 3% minimum for first-time buyers
  • 🏛️ FHA Loans
    500-579: 10% down payment required
    580+: 3.5% down payment
    Note: Individual lender overlays may apply
  • 🇺🇸 VA Loans (Veterans)
    Official minimum: None
    Typical lender requirement: 580-620
    Benefit: 0% down payment, no PMI
  • 🌾 USDA Rural Housing
    Automated approval: 640+ typical
    Manual underwriting: Lower scores considered
    Benefit: 0% down in eligible rural areas
  • 🏡 KHC Down Payment Assistance
    Requirements: Follows underlying loan program
    Assistance: Up to $10,000 down payment help
    Eligibility: First-time buyers, income limits apply

Credit Score Impact Breakdown

Payment History 35%
Credit Utilization 30%
Length of Credit History 15%

Fast-Track Credit Improvement Strategies

  1. Pay all bills on time — Set up autopay for minimum payments
  2. Lower credit utilization — Keep balances below 30% of credit limits (10% is ideal)
  3. Don't close old accounts — Keep them open to maintain credit history length
  4. Dispute errors immediately — Pull free reports from annualcreditreport.com
  5. Avoid new credit applications — Stop applying 6 months before mortgage shopping
  6. Pay down collections — Recent collections hurt more than old ones

Timeline for Credit Issues

  • Late payments: 7 years
  • Collections: 7 years from original delinquency
  • Foreclosure: 7 years
  • Chapter 7 Bankruptcy: 10 years
  • Chapter 13 Bankruptcy: 7 years

💡 Pro Tip

You don't need perfect credit to get approved. Many of my clients get approved with scores in the 580-620 range using the right loan program and strategic planning.