How to Improve Your Chances of Getting a VA Loan with a Low Credit Score
The VA technically does not have a minimum credit score in their underwriting guidelines. However, improving your credit score can result in a better interest rate and lower closing costs.
Tips and strategies for boosting credit scores to increase eligibility for VA loans.
- Keep your credit balances low and payments on time
- If you do not have any credit cards, you will want to apply for at least 1 or 2 credit cards, use them and pay on time
- When your scores are low you may not get approved for a credit card, if this is the case you can apply for a secured credit card. A secured credit card will require a deposit to receive your credit card. Since you are technically funding your credit card limit, you will not be declined for a secured credit cards
- Collections and charged off accounts that are over 12 months old can still affect your credit scores but may not affect your VA underwriting approval. Before you pay these off you should contact an experienced Loan Officer who knows VA Manual Underwriting Guidelines to confirm your options. Sometimes paying collections and charged off accounts can temporality drop your credit scores
- If you are renting, making your rent payment to a 3rd party is the best way to verify your rental history. If your landlord can post your rental history to your credit this can help with your VA underwritten approval.
VA Loans with Low Credit Scores vs. Bad Credit. What’s the Difference?
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