Credit Score & VA Loan

3 Key Factors That Affect Your Credit Score & VA Loan

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Are you a veteran who wants to buy a house in the U.S.? Then, you should opt for a VA loan program. Secured by the United States Department of Veterans Affairs, VA loans assist veterans, services members, and eligible surviving spouses to become homeowners. Though there is no credit requirement set by the Department of Veterans Affairs for the loans, lenders who fund the loans will usually have credit requirements that the homebuyers need to meet.

Do you want to know what is the required credit score & VA loan? Well, it varies from a lender to another one. When determining credit eligibility for a VA loan, lenders always analyze the credit profile of the borrower. Along with your credit score, the lender will check your past credit patterns in order to determine willingness to repay. Do you want to be familiar with the factors that affect your credit profile and ability to get the loan? Here is a list for you.

  • Late mortgage payments

In circumstances when bankruptcy is not involved, you have to show a satisfactory credit. And to do so, you have to make satisfactory payments for one year after the date of the last derogatory credit item(s). Some of the mortgage lenders may allow VA buyers to have one or more 30-day late payments. But the policies vary by lender. Account balances that are reduced to judgment by a court should either be paid in full or subject to a repayment plan with a history of timely payments. Polices on judgments can also vary from a lender to another one.

  • No credit history

If you don’t have a credit history, then it will be difficult for you to get a VA loan. Some lenders might be okay even if you have only one credit score. However, you need to meet their in-house benchmark. If you don’t have a credit score then you have to spend time to build a credit profile before you apply for a VA loan. Some mortgage lenders may consider non-traditional credit tradelines for borrowers with a minimal credit history; however, these guidelines may vary by lender.

  • Collections & federal debts

Mortgage lenders can have a maximum allowable threshold for a derogatory credit that can include collection debt. Those cops can differ with lender, as well as other factors. Defaulted borrowers or the ones who are delinquent on any federal debt may need to on a repayment plan with a history of on-time payments. Moreover, mortgage lenders may not want to move forward with a VA loan until you are cleared from a federal debt database, known as CAIVRS. In case you have defaulted or delinquent federal debt, talk with a loan specialist.

Along with the mentioned ones, factors like chapter 7 bankruptcy, chapter 13 bankruptcy, and foreclosure also have an impact on credit score and VA loan program. So, keep these factors in mind and take proper steps to get approval for a VA that is the key to fulfilling your dream of homeownership.

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