19 Aug How to Qualify for a VA Bad Credit Loan?
The US Department of Veterans Affairs (VA) provides living assistance through the VA home loans. These home loans come with no downpayment requirements, lower interest rates, no PMI or pre-payment penalties and easy eligibility criteria. However, the question is- can you qualify for a VA bad credit loan?
CREDIT SCORE REQUIREMENTS FOR VA LOANS
While the department is pretty lenient when it comes to credibility, you must pass certain credit requirements to qualify for a VA loan. The department does provide VA bad credit loans. However, you must have a minimum credit score of 600 and an average credit history to qualify for these benefits.
Moreover, in addition to meeting the service requirements and financial conditions, you must also meet the lender’s requirements and other credit, income and financial requirements to qualify.
Your VA-approved private lender will conduct a background check to get an estimate of your debt-to-income ratio, credit history and residual income.
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When applying for a VA bad credit loan, the lender will take a look at your assets, income, net worth, other loan obligations, employment history, type of military service and credit history.
CREDIT SCORE REQUIREMENTS FOR REFINANCING A VA BAD CREDIT LOAN
In addition to checking the above-stated tangents, the lender will also take a look at the payment of monthly installments when refinancing a VA loan.
Therefore, it’s recommended to pay your monthly installments on time, so you could qualify for a VA bad credit loan with refinancing options. Unlike a purchase loan, VA IRRRL or Cash-Out comes with flexible guidelines and easy eligibility criteria.
CAN YOUR CREDIT SCORE AFFECT THE RATE OF INTEREST?
Though the department provides VA bad credit loans to applicants with a bad credit score, it is always recommended to have a good credit history so you can qualify for the lowest interest rate possible.
Applicants with an average or poor credit score are subjected to higher interest rates, which could make the monthly installments harder to pay.
HOW TO IMPROVE YOUR CREDIT SCORE?
While you might qualify for a VA bad credit loan, having a good credit score has its own perks. Here are some ways to improve your credit score-
- Monitor your credit score by checking it online and look for any errors.
- Don’t max out your credit limits.
- Track your bills. Make timely payments and avoid delaying any necessary payments.