05 May How To Improve Credit Scores For VA Home Loans?
Your credit score can hugely impact your VA loan eligibility. Though it’s a fact that the VA does not require you to have a minimum credit score to establish your eligibility for the mortgage, several VA-approved private lenders might expect you to have a minimum credit score of at least 620.
In addition to this, you might be able to qualify for lower interest rates if you have a high credit score, accounting up for some major savings.
So, if you are up for these $0 down mortgages, here’s how you can work on your credit score.
An Overview of VA Home Loans
VA home loans are mortgages offered exclusively to Veterans, service members, reservists and family members. The US Department of Veterans Affairs (VA) backs this loan and ensures that they are available at the lowest possible interest rate.
These mortgages come with the following benefits-
- They come with a $0 downpayment requirement.
- You don’t need to purchase PMI either.
- They have the lowest interest rates.
- They have easy eligibility criteria.
- The closing cost is usually the lowest.
- You can enjoy flexible guidelines.
Working On Your Credit Score
Here are some tips to help you improve your credit score for VA loans-
Try to use credit services responsibly
You can improve your credit score by paying all your bills on time and taking only the required credit. Try not to take up credit that you can’t handle.
In addition to this, look out for excessive credit requirements. Looking for different credit cards is one thing, but applying simultaneously for additional cards can have a massive impact on your credit score.
Also, never co-sign a debt with your friends or family. Your credit score would directly be wired to them, and it could take a hit if they failed to make the payments on time. Keep your credit to yourself and use it responsibly.
Never Max Out Your Credit Card
Always remember not to use your credit card more than 30% of the card’s limit. This can improve your credit score and keep your spending in check. This means not spending more than $300 on a $1000 credit card and $3,000 on a $10,000 credit card.
And, if you don’t have a credit card, try getting one. It will improve your score to a great extent, given you use that responsibly.
Let your credit cards age, even if they’re not in use
If you have a credit card that is no longer in use, try not to close them. Instead, keep them and let them age. This will increase your credibility and improve your score.
Consolidate your debts
Before you qualify for a mortgage, you must pay the outstanding debts like tax liens, judgments and federal obligations. And, if you have an ongoing debt that can’t be paid at once, you would be required to show evidence that you’ve been making timely payments for at least 12 months.
According to the data published by the US Public Interest Research Groups, every one in four credit reports contains errors that can affect your score. So, take out your report and look out for serious errors. Look out for information on the account that does not belong to you. There might be outstanding dues for which you’ve already paid.
In case of error, notify the credit bureau right away and keep your score in check.
There’s nothing secret about improving your credit cards. You can find plenty of information online on how to improve it. Therefore, it is wise not to pay to enhance your score. Several companies might ask you to make a payment to improve your credibility. It’s best to stay clear of them.