VA Home Loan with Bad Credit: 4 Aspects of Credit History That You Need to Focus

Sharing is caring!

VA loan is a specially designed home loan program for veterans, military officers, and their surviving spouses. The credit guidelines of this loan program give homebuyers more opportunities to buy or refinance despite the bad credit. And for this, borrowers with a low credit score prefer to opt for this loan program.

Opting for a VA home loan bad credit in Houston allows you to realize your dream of homeownership in spite of having a low credit. Besides, you are making a 0% down payment; you can get the loan even after bankruptcy.

Although there is no minimum credit score that you need to have, to qualify for a VA loan, there are some other aspects of your credit history that they will look at, including –

Rent and mortgage payment history

In case you have got several late payments on a credit card, as well as installment debt, but you have maintained your rent or mortgage payment on time, the VA will consider your loan for approval. The VA guidelines put a premium on housing expense payment history. This is why; a perfect rent or mortgage history carries more weight than a poor payment track record on other credit accounts.

Your last 12 months of credit history

Whether you are currently in a Chapter 13 bankruptcy or have several collections on your credit report from a few years ago, you should keep this in mind that the VA is going to most closely check the last 12 months of payment history. Even if things were not good regarding credit a year ago, the VA may consider your credit satisfactory in case you have made payments on all of your other credit obligations on time for the last 12 months.

Your last twenty-four months of payment history after bankruptcy or foreclosure

In cases of foreclosure or bankruptcy, the VA will want to see the last two years of on-time payments on all of your other credit from when the major credit event happened. Even a single late payment will start the clock over – if you pay 14 months of on-time payments properly and then somehow miss a single payment of a small amount, the waiting period starts over from the most recent late payment.

Your CAIVRS history

CAIVRS or the Credit Alert Interactive Verification Reporting System is another thing to consider. When you apply for a VA loan, your information is checked to determine in case you have defaulted on any federally-assisted loans. The default information on the database searches for overpayments related to education benefits, disability benefits income, or claims paid due to VA loan foreclosures.

Getting a VA loan approval with a low credit score is not impossible. But if you want to get the best mortgage rate, then you should take steps to improve the score. So, what to wait for? Get started today!