Did you know that your credit score matters for VA home loans? Yes, credit score leaves a severe impact on whether you should get a mortgage or not. This factor is responsible for fixing the down payment amount and interest rates as well. When you will go through the application process, the score can be a boon or headache. If you have high credit score, you will end up having lower interest rates.
VA loan comes with a special opportunity for active-duty military service members, eligible members of the National Guard, veterans and surviving spouses to build their first homes. A permanent shelter is a basic necessity in everyone’s life and VA fulfills such dreams. Also, breaking the common myth, the loan program is not only for first-time homebuyer. Anyone passing the eligibility criteria can reuse the loan and live their dreams. On the other hand, to unlock all these lucrative benefits, you need to have a specific credit score. That’s why; we present you all the information regarding credit score for VA loan here.
What is the minimum credit score?
VA home loans may not require credit score but lenders follow different rules. Hence, the underwriting requirements differ from one lender to another. And you must show the minimum score if you wish to get an approval. It is better to have a credit score of 620 or above for qualifying the crucial stage. If you are stuck with poor credit, you need to have at least 500. In case, your credit score is lower than 500, you should wait and work upon it.
What happens if you fall behind?
When it is for VA home loans, good credit scores offer better rates and terms. Yes, a low credit rating does not obstruct your way from getting a loan but you will be deprived. You should know that credit score keeps changing continuously. If your fiscal habits are right on point, the score will be on positive side. You can take time in establishing credit history, paying overdue payments, and following other measures.
What if you have no credit history?
The lenders always ask for credit history to avoid certain issues further. The customers who lack a credit history need to spend more time in creating a credit profile. This task is a push towards getting eligible for the VA loan. There are many lenders that focus on non-traditional credit trade lines. Of course, such cases only occur when the borrower is left with a poor credit rating.
What if you have a past history of bankruptcy?
VA home loans allow past bankruptcy but you need to pass 2 years before applying. When there is a late payment over 24 months, a VA lender may have to struggle further. You need to pay the utility and rent bills on time to prove the change. It is easy to guess how bankruptcy hurts the scores but potential borrowers can repair the credit report again.
After going through these suggestions, you can have other queries regarding the link between credit score and VA home loans. So, you can seek professional assistance and get approved for such loan programs.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.