Borrowers may need to fix bad credit for VA loan qualifying. Even though the VA guidelines don’t mention a minimum credit score for VA loan qualifying, a score of 590 probably won’t cut it. Lenders almost always have their own minimum credit score requirements. The VA standards have to do what the government requires to provide its guarantee on a loan. But, it’s the lender that actually makes the loan. So lenders can have additional VA loan qualifying requirements to meet underwriting standards.
VA-eligible borrowers can typically be considered for a loan if their score is closer to 640 or above. If your score is below that, you’ll likely need to fix bad credit. Bad credit isn’t the end-all to a VA loan. People with damaged credit have been known to turn it around in a relatively short time.
Stick with a Plan to Repair Bad Credit
Follow these Federal Reserve tips to improve credit:
- Get a free credit report at www.annualcreditreport.com
- Itemize credit issues and mistakes
- Understand how your credit score is determined. The Federal Trade Commission has a primer for consumers on credit scores: Facts for Consumers
- Fix issues and mistakes by calling your creditors directly
- Pay your bills on time – automatic bill pay can help
- Avoid credit repair scams
It’s a fact, mortgage qualifying has gotten tougher. Even the VA loan program, known for its relaxed qualifying standards, has tightened up a bit when it comes to lender’s credit standards.
Call creditors yourself to avoid scams
Often credit card companies are willing to work with their borrowers who’ve gotten in over their heads. Ask for a lower interest rate and a payment plan. You may get what you ask for. Credit repair agencies certainly have a place in the market. But beware; going this route can end up costing you more money than if they were to just call creditors yourself. And, using a credit repair agency can leave a mark on your credit report. Dealing with creditors yourself is often the best way to resolve issues and avoid scams.
What do you think? Tell us below. And, for more about VA loans, contact a specialized lender.