Many lenders require your credit score to be above a certain number before they’ll issue you a VA loan. And they’re allowed to do that.
But there isn’t a minimum credit score for VA loan qualification according to the VA’s guidelines, so Low VA Rates chooses not to require one. We can, and often do, work with veterans who have very low credit scores.
Good and Bad Credit Scores
To refresh your memory, the lowest possible credit score is 300, and the highest is 850. Lenders often rate scores like this:
- <550: Bad
- 550–649: Poor
- 650–699: Fair
- 700–749: Good
- 750+: Excellent
We know that some veterans with low scores have just had financial trouble in the past, but they’re now able and willing to pay their debts. And some veterans just haven’t had a chance to build a credit history yet.
Because of these reasons, we’ve chosen to help them instead of just turning them away for a loan.
How to Improve Your Credit Score
Of course, we’re still aware of borrowers’ credit scores, and there’s a cost to a low score: you probably won’t be able to get the best interest rates, which leads to higher monthly payments.
Some borrowers choose to work on improving their credit score before taking out a mortgage—even if it takes a year or two. You’re going to pay off a house over many years, so it can benefit you to have lower payments over that whole period.
And we’ll definitely work with you any time you’d like to get a quote! And, if we find out your credit score doesn’t qualify you for the interest rate you’d want, we’ll work with you directly to help raise it, even if it means waiting a while before you can get a mortgage from us.
But, in the meantime, if you’re not quite ready to call in and talk with a loan officer, here are five tips that can help you start raising your score now:
- Never be late on debt payments
- Keep low or zero balances on credit cards
- Only get one new line of credit at a time
- Pay off debts as soon as possible, beginning with the one that has the highest interest rate
- Order your credit report once a year and fight any mistakes in it
One thing to note is that, even if you follow these pieces of advice exactly, you might not see an improvement to your credit score for several months. This is especially true for paying off a debt.
The reason for this delay is that it can sometimes take a few months for the credit bureaus to remove that debt from your credit report. But we promise, if you follow these steps, it will happen!
Even if you don’t have any kind of credit history, these five pieces of advice still apply, though in a slightly different way. Essentially what you’ll want to do is get a single credit card and follow these five guidelines in how you use that card.
Doing so will help you start building a positive credit history, and once you’ve developed good habits with one card, you could apply for another one, and so on, to keep that positive credit data growing.
How Low VA Rates Can Help Those with Low Credit Scores
We specialize in loans for veterans. If you talk with one of our loan specialists—some who are veterans like you—he or she will look at several factors in your background.
One of the first and most important is your honorable military service is first. The next important qualification is the stability of your income, which can be from a job, VA disability payments, or investments.
They’ll also help you add up all your expenses, including debt payments and the potential VA loan, to make sure you’ll have enough money left over at the end of each month. This is a VA guideline, which helps the VA loan program to be safer for you and for all veterans.
And, while they’ll also look at your credit score, we know that a high credit score doesn’t always guarantee that someone can handle a new mortgage because their situation may have changed.
We also know the opposite is true, so even if you have a low credit score, you can qualify for a good VA loan as long as you can show your willingness and ability to afford and pay for it.
So, whether you choose to improve your credit score first or you want to buy your home right away, Low VA Rates will be here to help.