What is the Minimum Credit Score for a VA Loan?
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 work with veterans even with very low credit scores—and often do.
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 and lower: Bad
- 550–649: Poor
- 650–699: Fair
- 700–749: Good
- 750 and higher: 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.
How to Improve Credit Scores
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.
Of course, we’ll work with you any time you’d like to get a quote! But if you’re interested in improving your credit score, below are five steps you can follow, which are simple in concept but take persistence:
- 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 with the highest interest rate
- Order your credit report and fight any mistakes in it, and repeat this step at least once per year
Now, you might pay off a debt but not see an improvement to your credit score for several months. That’s because it can take that long for the credit bureaus to remove that debt from your credit report.
Finally, if you don’t have any credit history, one recommendation is to get a single credit card and practice the five guidelines above with that card. Once you’ve developed good habits with one, you could apply for another one, and so on.
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 of which are veterans like you—he or she will look at several factors in your background. Honorable military service is first. The next important qualification is the stability of your income, which can be from a job, from VA disability payments, or from 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.
Does a high credit score guarantee that someone can handle a new mortgage? Not always. Their situation might have changed. And the opposite situation is that even if you have a low credit score, you can show your willingness and ability to pay and can qualify for a good VA loan. Whether you choose to improve your credit score first, or you need to buy your home right away, Low VA Rates will be here to get you our best quote.