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VA Loans with Bad Credit

While your credit score is an extremely important figure factored into your VA loan approval process, there are certain steps you can take to secure a VA loan with a lower-than-desired credit score.

Updated on February 23, 2023

VA Loan Credit Score Requirement

Your credit score is an essential part of your financial history. Since the VA doesn’t actually make loans, they don’t require a certain credit score. They leave it up to VA lenders to set this requirement and determine who to lend to. That being said, it’s common to see VA lenders having a minimum credit score requirement of 620.

While this may not be what your credit score looks like, there are certain steps you can take to help get you there.

How to Improve Your Credit Score for a VA Loan

Say you have a credit score lower than what your lender is asking for. How can you improve this? Let's dive into some simple ways to improve your credit score in order to get your VA loan.

Make Payments On-Time

When lenders dig into your credit history, they’ll be interested to see if you paid your bills on time. Past payment performance often indicates future payment performance and can give lenders an insight into whether or not you’ll be able to make mortgage payments on time.

Dispute Errors

You should always keep an eye on your credit history for any inaccuracies. Let’s say your credit history shows you missed a payment. This can cause a big ding in your credit score. It also doesn’t show lenders the full-picture while evaluating your financial background. You want to put your best foot forward, especially when applying for a VA loan, so be sure to correct any inaccuracies.

Pay Off Debt With High-Interest First

Debt plays a huge role in calculating your credit score. If you’re unable to repay all your debt at once, start with the debts with the highest interest rate. The longer you wait to pay off the bill, the more money you will end up paying in interest. Keep working towards paying off the high-interest debts before you consider any of the low-interest ones.

Luckily, with the VA home loan benefit, you are not required to make a down payment. By utilizing your benefits, you can save a considerable chunk of change. You can then use that money to pay off your debts and increase your credit score.

What if My Spouse Has Bad Credit?

First, remember that the only acceptable co-borrower on a loan is a spouse or another Veteran. It's important to note that if there is a co-borrower, such as your spouse on the loan, both parties on the mortgage will have to meet both VA and lender requirements.

For example, most married couples pursue a VA home loan together, each obliged on the mortgage note. Usually, a husband or wife may not have enough income to purchase the home of their dreams independently, so adding in that second income of a spouse can do wonders for your purchasing power and debt-to-income ratio.

Like all things in the mortgage industry, be sure to check with your preferred VA lender and homebuying specialist to discuss your financial standing and VA loan eligibility.

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Veterans United Home Loans is a VA approved lender; Mortgage Research Center, LLC – NMLS #1907 ( Not affiliated with the Dept. of Veterans Affairs or any government agency. Not available in NV. 1400 Forum Blvd., Columbia, MO 65203. Equal Housing Lender