VA loans have many advantages, one of which is the relaxed credit score requirements. VA loans are backed by the government, making them less risky for lenders. Because of this, lenders usually have a lower credit score requirement to qualify for a VA loan.
To learn more about what the VA loan credit score requirements are, read on. We’ve compiled a list of everything you need to know about VA loans and credit scores.
What are the VA Loan Credit Requirements?
There are several credit factors that VA lenders will take into account for home loans. Most lenders will ask you for the following information:
- History of rental and/or mortgage payments
- History of foreclosure or bankruptcy
- Federal debt
- Debt-to-income ratio (DTI)
- Previous credit history (last 90 days)
- Employment and resident history
If you think that one or more of these requirements may be problematic in your VA loan application, consult an expert.
Even if you have a low credit score, you can still qualify for a VA loan. VA Loans For Vets are experts at helping veterans qualify for VA home loans.
What VA Loan Credit Score Do You Need?
The Department of Veterans Affairs does not have a minimum loan score needed for a VA loan. However, many lenders will have different credit score thresholds to award a VA home loan.
Many lenders will prefer a credit score above 600, but some lenders will still loan to veterans with lower scores.
What is the Minimum Credit Score to Buy a House?
The minimum credit score you’ll need to buy a house will depend on your lender. Even with poor credit, it’s still possible to secure a VA home loan. Unfortunately, with a lower credit score, you’re likely to have a higher interest rate on the loan.
There is not necessarily a minimum credit score. Your chances of acquiring a home loan improve with scores above 620. The higher your credit score, the better your chances of being accepted for a VA loan with a low-interest rate.
Which Credit Score Do Lenders Use for VA Loans?
There are three main issues of credit scores used by lenders: TransUnion, Equifax, and Experian. Most lenders will use credit score reports from one of these credit bureaus. To monitor your credit, you can set up free accounts on each of the credit platforms.
Lenders Require Your VA Loan Eligibility
To apply for a VA loan, you’ll need documentation of your eligibility. The requirements to use a VA loan are as follows:
- A veteran
- An active duty service member
- A member or discharged member of the National Guard and Reserve
- A surviving spouse
You must prove your lender with proof that you met at least one of these qualifications. You only need to meet one of the requirements to be eligible for a VA loan.
VA Loan Credit Score Requirements Compared to Others
One of the benefits of applying for a VA loan is the reduced credit requirements. VA home loans typically have lower credit score thresholds than other types of home loans.
Most lenders for VA mortgage loans will prefer a score over 620. This is because VA loans are backed by the government and carry less risk for lenders. Conventions loans do not offer this added security. Most conventional mortgage lenders will look for scores closer to 740.
It is possible to obtain either a VA loan or a conventional loan if you fall beneath this threshold. In these cases, lenders may ask for additional security in order to award the loan. They may request a larger downpayment or another assurance.
Typically, VA loans do not require a down payment. However, your lender may request a down payment if your credit score is too low. If this is the case, you can also consider other lenders in your area.
Considering other lenders will help you get a better picture of your loan options. If you are approved for more than one VA loan, you’ll be able to see a side-by-side comparison of the offers. Some lenders may give you better interest rates than others.
How to Improve Your Credit Score
If you have a low credit score, it might affect your ability to receive a loan. The best way to improve your loan offer is to improve your credit score. A good credit score will give you the best chance of a competitive loan offer.
Better loan offers mean paying less in interest, so consider working to improve your credit before applying for your VA loan. A good credit score is around 740 or higher. Here are some ways you can improve your credit score.
- Don’t apply for new credit
- Catch up on any past-due payments
- Dispute any credit report errors
Get Approved for a VA Loan
Need help getting approved for a VA loan? At VA Loans For Vets, we have a dedicated team of experts ready to help you get approved for your loan.
Whether you need advice navigating the VA loan process or you’re wondering how you can improve your credit score, we’re here to help. Give us a call at 602-908-5849 to learn more.