Have you been wondering how you can get a VA loan with poor credit? Read the article now!
When you are in the military, maintaining a good credit score is not quite possible. After returning, you are likely to be in between jobs. Of course, you would love to settle down and start a family at the same time. Even if you can rely on your savings and other funding, the house seems to be a challenge. After all, credit scores are more than necessary when purchasing a house. Don’t get scared away, your service period earns you the most beneficial mortgage program. VA loans are exclusively available for present and former military servicemen.
Many home loan options do not come with a big down payment, and it is a relief for financially distressed buyers. In addition to it, the loans do not need an excellent credit score either. Because of the low credit score for VA loan in Houston, the mortgage program turns out to be just perfect for every military borrower. Moreover, private lenders issue loans. This gives you ample chances to shop around as well.
VA loan is insured by the Department of Veterans Affairs. You can use it for buying a home or VA-approved condo, manufactured home, and building a home. However, you cannot land a loan with credit scores lower than 550. So, the article is crafted for those who struggle with bad credit. Let’s take a look below.
See What Affects the Credit Score
If you apply for new credit, you can find yourself in large debt. This leads to a hard inquiry, and it can pull down your credit score. Hard inquiries are a red flag, and several hard inquiries within a short period can become fatal. When the VA-approved lender pulls your credit report, these problems will appear. Furthermore, the lender checks the credit report before closing. So, be careful about applying for a new credit application after the pre-approval process. If you apply for new credit and the FICO score falls below the benchmark, this can cause serious trouble.
Paying down is always a Better Idea
While you are working for credit repair, you should not close all your old accounts. Paying down the accounts is a perfectly fine idea, but do not close. For how long you have the credit is an essential factor. Older and low-balance accounts can be great because the outstanding balance only comes with 30% of the limit. If you want to get rid of the debt ratio, your target should be around 50% of the credit limit. When you are paying down the old accounts, the problem is solved.
In essence, VA loans have a low qualifying credit score requirement. Lenders who offer conventional loans demand 620 credit scores. On the other hand, lenders are still allowing buyers with 550 credit scores in Houston, TX. VA loans indeed have many benefits but you might have to pay for the one-time funding fee as well. So, shop around and choose wisely!