05 May Benefits of a Good Credit Score for Veterans
When considering your financial options as a Veteran, it is pretty helpful to have a good credit score. Though you can qualify for benefits like VA home loans even with a shaky credit score, having a good or fair score can surely help you qualify for the best deals and save a lot of money.
When it comes to establishing eligibility for the $0 downpayment VA home loans, you can get a quote even with a credit score as low as 600. However, if you have a score ranging between 700 to 750, you can get the lowest possible interest rates and choose between a wide selection of VA lenders.
So, if you’re really wondering to find out why a good credit score is worth it, read on to find out. The blog will also cover everything you need to know about improving your credit score.
Remarkable Benefits Of A High Credit Score
Here are some of the benefits of having a good credit score while qualifying for VA loans-
You can qualify for lower interest rates.
Always remember the higher your credit score, the lower the interest rates. With a credit score ranging from 650-700, you can qualify for the lowest possible interest rates.
This is not only applicable for VA loans when buying a home but also for credit cards, auto loans, personal loans and claiming other financial products.
You can choose different lenders.
While qualifying for a VA loan, it is often recommended to choose the quote provided by three different lenders. This helps you compare the rates and decide upon the best one.
However, if you have a low credit score, you might not have enough choices as most lenders may refrain from offering you a quote. Therefore, it’s recommended to work on your credit score before you actually apply for a VA loan.
A Brief On VA Mortgages
VA home loans are government-guaranteed mortgages that are available on the lowest interest rates and come with additional benefits like-
- No downpayment requirements
- No PMI (Private Mortgage Insurance) requirements, even if you don’t want to make a downpayment.
- Low closing cost
- It comes with an assumability feature.
Moreover, another noteworthy benefit is that they are guaranteed by the US Department of Veterans Affairs (VA). This means that if you fail to repay the loan on time, the department will pay a part of it back to the lender. This encourages lenders to provide VA loans at the lowest possible interest rates.
To qualify for VA home loans, you must meet military requirements, and the lender’s financial requirements and make sure your house meets Minimum Property Requirements (MPRs).
What Are The Minimum Credit Requirements For VA Loans?
If we state the facts, there are no minimum credit score requirements set by the department. However, because the loans are offered by VA-approved private lenders, they might require you to have a minimum credit score of 620.
You can even get in touch with some lenders who are willing to provide loans at a credit score as less as 570. However, it is recommended to work on your credit score before applying to qualify for the lowest possible interest rate.
Lastly, different lenders might have different credit score requirements. In addition to this, you must have a debt-to-income ratio of less than 40% and enough residual income.
Residual income is the income left after you subtract all your expenses, including monthly installments for the debt you own to others.
VA loans are extremely easy to apply for and help you purchase your new home at flexible rates. While you can qualify with a lower score, Veterans with a good credit score might be eligible for additional perks. You can work on your credit score by paying off your debt, trying not to max your credit card, keeping your credit card balance low and paying bills on time.