FAQ; VA Loan with Poor Credit

Working in the VA mortgage industry for 8 years I get a lot of questions asked regarding everything from credit to inspections.  Needless to say, I have been around the block a few times.  Today I thought I would post a topic because I have recently started focusing on VA purchases instead of the VA IRRRL program.  Now credit becomes a factor of approval whereas the IRRRL does not.

POOR CREDIT DOES AFFECT YOUR LOAN

Back when the subprime market was such a big thing is seemed like anyone could buy a home.  The only thing that was affected by bad credit was the interest rate.  If someone with bad credit got a loan their interest rate would be anywhere from 7.5% to 10%.  The idea was let’s get a home and then when our credit improved the home was just refinanced to a lower rate.  Obviously that wasn’t the case because property values dropped and no one could qualify – thus the housing crisis.  Now that the mortgage industry is “back to basics” there are fewer home buyers and an ever increasing need to make sure your credit is in good standing.  Because of the housing crisis the VA loan has been effected although the program hasn’t changed.  What changed was the lenders and their requirements to lend money to Veterans.  Here is how the VA analyzes credit – Its the Veterans past repayment practices on obligations.  This is the best indicator of his/her willingness to repay future obligations.  The Emphasis should be on the Veterans overall payment patterns rather than the credit score and isolated occurrences of unsatisfactory repayment.  In the case of adverse data (late payments), satisfactory credit is considered to be reestablished after the Veteran has made satisfactory payments for 12 months after the date of the last late payment.  Here is where the lenders have decided that does not work.  They have put minimum credit score requirements on VA loans.  Usually if the score is not 640 plus there will be no loan regardless of the payment history.

SO WHAT HAPPENS NOW?

Not all is lost.  In fact, I have helped many Veterans when they don’t meet the credit guidelines.  Over the years, we have gotten much smarter to our approach to getting a Veteran approved.  LowVARates has created an in-house credit repair department.  Just because you may think you have bad credit doesn’t mean you should not try to own a home.  Giving up would be fruitless and a poor decision.  Through credit repair, we can increase scores and remove late payments creating a valuable opportunity for a Veteran to own a home.

WHAT ABOUT NO CREDIT?

Having no credit does not automatically disqualify you either.  There are several circumstances where a Veteran might be in this situation.  Maybe a recently discharged Veteran has not had the opportunity to develop a credit history.  Maybe they use cash rather than credit.  Some will not use the credit after a BK or credit counseling and enough time has passed that there is no credit.  If this is the case then here is what can be considered as credit history:  Payment record of rent, utilities, car insurance, health insurance, cell phone bill, etc.  If there are in good standing then credit can be issued for buying a home.  Keep in mind that this is for Veterans having no credit.  These additional payment records will not be used to offset bad credit.

The bottom line is if you (Veteran) are looking at owning a home and you think you have bad credit you still should apply.  There are ways to help you and in some cases it might not be right away but through persistence and dedication on both the Banker and Veteran’s part YOU WILL BE ABLE TO OWN A HOME.

If this information has been useful or you have questions about this please feel free to contact me at 1-866-260-1379 ext 222 or email me at Nate@yourvapro.com.  Have a great day and as always happy house hunting!

23 thoughts on “FAQ; VA Loan with Poor Credit

  1. I WOULD LIKE TO PURCHASE A HOME BUY SEPTEMBER OF THIS YEAR. MY CREDIT SCORE IS 598 AND WORKING ON IMPROVEING IT. I WOULD LIKE TO USE MY VA LOAN OR SEE WHAT IQUALIFY FOR PLEAES HELP ME I CAN BE REACH AT 786-553-7697 THANK YOU

  2. i have good credit and pay all my bills on time but i have a few over drafts on my checking account can i still get a va mortgage loan

  3. I was informed by 3 VA representatives and a mortgage person that if the Veteran does not have a 670 credit score they will not get approved for a VA home loan. I have poor credit not bad credit and I did not even bother trying to get one. I was denied due to bad credit 4 years ago.

  4. Chris,

    Things have changed a little bit in the VA loan world. We should be able to help you out with a 670 credit score. What number or email can we reach you at?

  5. Hi have low 600’s credit score great debt ratio
    Want to buy a home
    Will I be able to qualify. Also self employed. :/

  6. Doris,

    If you are looking to purchase, you typically have to be at the 640 mark for your credit score. However, if you are close to that we can usually help you out. Give us a call at 866.569.8272

  7. I recently went through bankruptcy about 6 months ago I have the old GI bill for housing and I never used it. How long will it be before I may be able to use it to buy a home

  8. Chapter 13 or Chapter 7 bankruptcy? Are you still currently in the bankruptcy? How is your credit profile right now?

  9. hello there,
    My husband is a veteran and a full time student for almost 4 yrs now. I would like to purchase a home through VA using my credit and job but my score is only a 598 because I have no credit and only one credit card. Is there any hope for me or do I have to wait until my husband is gainfully employed after school.

  10. Nellie,

    Give us a call and we will do everything we can to help you out. that credit score may be an issue, but we may have a lender that is willing to work with that. call us at

    866.569.8272

  11. I am in a similar situation to some of the folks on here in terms of credit score/history. My question is this, will a lower credit score or spotty history negatively affect the amount of money that we are capable of borrowing? I received an honorable discharge from my base in Florida and decided to stay here to be closer to my future in-laws. Housing prices down here are quite high and I’m concerned that even if I am able to get my credit score to that magical 640 mark, I still won’t be able to borrow enough to afford a home in this area. Thank you for your support and knowledge.

    Bobby

  12. Bobby,

    The biggest effect that credit will have on your loan is your ability to get approved for a loan. Just so you know, we may have a lender that is willing to make an exception below the 640 mark. Give us a call and we will definitely help you out.

    866.569.8272

  13. My wife and I are trying to refinance and after completing a pre-qual are being told that we aren’t qualified because we have no credit cards on which we are carrying a balance. We completed a chapter 13 in Dec 2011 with no late payments and have no derogatory info on our records with any of the 3 agencies other than the chapter 13. Our scores are 685, 705 and 770 if memory serves. All are well over the baseline requirements. It sounds to me like someone is making decisions using guidelines beyond their capacity to interpret and apply.

    Isn’t making 5 years of timely payments to the Trustee, the mortgage company, a second line of credit, utilities, cell phone, cable, home phone, etc. without issues, the definition of …”the Veterans past repayment practices on obligations. This is the best indicator of his/her willingness to repay future obligations.”?

    Help!

    Peter

  14. Hello, my husband is a Veteran and has never used his VA loan, however we did own a home that we lost during the crash, when he lost his job! We sold the house at a short sell, does that mean it went to foreclosure? It hasn’t reported on our credit since 2010, also we are in a great position to buy again and he has an awesome job and has been there 3 years now! We are buying a new home from a broker using them as the note holder! But we want to buy this house! So could you please give us a call or email me please! 405-420-8144 TammyRinard@yahoo.com!

    Thank You
    Tammy!

  15. Hello, my fiance is a veitnam vetran 66-68 and now in the late years of his life has a chance to buy a home for only 11000 . His credit score is 620 I beilieve and we really need help to make his small dream come true . Please contact us at 7074961875 thank u and god bless

  16. IS IT POSSIBLE FOR ME TO GET A VA LOAN WITH POOR CREDIT SCORE OF 548? I HAVE A STEADY JOB PAY MY RENT AND OTHER BILLS ON TIME. IS THERE A PROGRAM FOR VETERANS WITH THIS KIND OF CREDIT.

  17. Fine way of explaining, and pleasant article to obtain data concerning my presentation focus, which i am going to
    convey in institution of higher education.

  18. I am a veteran, currently working a full time job, and a full time student. I have no credit cards, but I have private loans, no student loans. I recently checked my credit score and it showed two of which were 595, and 612. There are some fairly priced properties in my neighborhood some very cheap but needs lots of work in 20-40k, others in 80k, and 100k move in ready. Also is there a rural purchase program if not in city/town. Do I qualify or am I hopeless in Louisiana.

  19. Thanks for reaching out to us! We’d like to put you in contact with one of our loan officers who can look deeper into your situation. Please check your email inbox for a message from me so we can get in touch!

    We hope to hear from you soon.

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