VA LOAN CREDIT ISSUES
VA LOAN CREDIT ISSUES
Your ready to purchase a home, but you have pre-existing credit issues and you want to get a VA loan. This is where we differ from you local bank and most other lenders. We will accept you application with a 550 FICO score and assit with you credit. As an approved VA mortgage lender, we make every effort to get you approved even if you have a low FICO score because of past credit issues.
First, we will analyze your past credit performance. If you've made timely payments for the last 12 months, this may be enough to demonstrate your responsibility to repay your VA Loan.
But even if you have had some past credit issues, you may still qualify for a VA loan.
A period of financial difficulty does not disqualify a veteran if a pattern of consistent payments on debts has been established and maintained since then. Satisfactory credit is generally considered to be re-established after you or you and your spouse have made on-time payments for 12 months after the date of the last negative credit item(s).
What if you're just starting out and have no credit history? Lack of an established credit history should not be a deterrent to getting your VA Loan approved. Good payment history on items such as rent, utilities, phone bills, etc., may be used to establish tradelines to qualify.
Bottow line, underwriting looks at your overall pattern of credit behavior and your commitment to making payments rather than isolated cases of slow payments that are most important.
WHAT ABOUT BANKRUPTCY?
VA guidelines state that a minimum of two years must elapse since the discharge date of the veteran borrower and/or spouse's Chapter 7 bankruptcy. A full explanation of the bankruptcy will be required. You must also have re-established good credit, qualify financially and show job stability.
The VA will consider a borrower still paying on a Chapter 13 Bankruptcy if the payments to the court have been satisfactorily made and verified for a period of one year. Court trustee will need to give written approval to proceed. A full explanation of the bankruptcy will be required. You must also have re-established good credit, qualify financially and have job stability.
If you have any collections, judgments or federal debts pending, you may have to answer for them. If a collection is minor in nature, it usually does not need to be paid off as a condition for VA Loan approval; but judgments must be paid in full prior to closing. Veteran-borrowers can't be delinquent on a federal debt, including tax liens, student loans, etc. Bring all debts up to date to best support your chances of getting VA Home Loan approval.
WHAT ABOUT FORECLOSURE?
Unfortunately, if you have had a previous foreclosure or deed-in-lieu of foreclosure within the prior two years, you are not eligible for a VA loan.
However, if a veteran, or veteran and spouse, have prior adverse credit and are participating in a Consumer Credit Counseling Plan, the VA may consider you to be working on it, and deem that you are thus a satisfactory credit risk - once you demonstrate 12 months of satisfactory payments and the counseling agency approves the new credit.
Credit is never damaged beyond repair. We offer guidance on how to clean your credit history at no charge!