The VA understands that some VA borrowers may have had some credit issues in the past. So the VA is fairly flexible and willing to work with veterans and active military when it comes to their credit scores and getting approved for VA financing.
Below is an overview of how the VA will evaluate certain derogatory issues on your credit:
- Credit score: Generally it helps to have at least a 600 middle credit score. You have one credit score from each of the three credit bureaus, VA lenders throw out the high and low scores and use your middle score to qualify. If you have below a 600 score, contact me and I can analyze your credit and possibly quickly raise your score.
- Past Bankruptcy: Bankruptcy 7 requires two years to have elapsed since discharge to be eligible for a VA Loan. Bankruptcy 13 requires 1 year since, on time payments and permission from the court. If you have major extenuating circumstances that can be documented, exceptions can be made.
- Foreclosures: Two years since foreclosure sale. Short sales are considered foreclosures and require two years.
- Collections: It is on a case-by-case basis with the VA underwriter whether you will have to pay these off before being approved. Generally medical collections will not have to be paid but you will need an explanation. Non medical collections over $5,000 may have to be paid.
- Judgments: Must be paid in full or a satisfactory payment plan in effect at time of application with no late payments.
That is just an example of some VA Loan requirements related to credit. VA streamline refinance IRRRL’s in many cases do not require a credit report.
If you have any questions about getting approved for a VA Loan and/or you would like to go over your credit report with me, please give me a call at 858-922-7899 or don’t hesitate to email me at homeloan8@gmail.com.
Warm Regards,
Rob Chomentowski
Sr. Loan Officer (and VA Loan specialist)
858-922-7899
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