(Closed) VA loan credit score??

posted 3 years ago in Finances
Post # 2
Member
159 posts
Blushing bee

Have you talked to a mortgage lender? They’re going to answer all your questions and walk you through it. My bf and I are in the process of getting his score up to qualify for an FHA loan and our lender has been helpful in telling us each step.

Post # 4
Member
1770 posts
Buzzing bee

If you’re buying a house together, they will need to look at both of your credit scores, both of your incomes, both of your debts, your consistency with paying bills and credit cards and rent on time, your ability to pay back loans, how much you have in savings, etc.  It’s a whole bunch of things so your best bet is to try to keep yourselves in as good financial shape as possible.  My husband and I both have stellar credit.  We were both in the 800’s…I think 850 is the highest and we were pretty much right about there.  We had money saved for the down payment – I think you really need to have that ready, plus closing costs and lawyer fees…it does add up.  Talk to a mortgage counsellor and see how much you can get preapproved for or if you qualify for a preapproval amount. Getting preapproved means you can go shopping with an amount in mind and you can see what is in your area of affordability.

Post # 5
Member
10991 posts
Sugar Beekeeper
  • Wedding: City, State

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annawalshhh :  

No lender is going to think you’re crazy for applying for a mortgage with a 600 FICO.  Unfortunately, the cut off for VA is 620.  

He just needs to pull his score up 20 points, FICO.com has good info and message boards on that.

Here is the info about VA loans.

 

VA Loans and Credit Score Minimums: What All Buyers Need to Know

Post # 6
Member
14045 posts
Honey Beekeeper
  • Wedding: November 1999

{Edited to remove incorrect information}

My advice would be to (a) talk to a mortgage professional about your options, (b) postpone buying a house for at least a year, and (c) do everything possible to raise his score.  Research how to do this.  A lot of credit cards have started providing FICO scores and offering tips to improve your score right in your online account.  If he doesn’t have a card offering this, you can research and find a TON of information about how to raise his score. 

Post # 7
Member
10991 posts
Sugar Beekeeper
  • Wedding: City, State

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JiminyCricket :  

VA loan rates are lower than other loans and there is no PMI.  It’s a unique critter.

Post # 8
Member
14045 posts
Honey Beekeeper
  • Wedding: November 1999

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sassy411 :  Ah, interesting.  We aren’t military so we only researched FHA and conventional when we bought.  Regardless of that, I still think improving his score should be a priority before buying a home.  In my area, they actually run your credit before setting up your electric account and you have to pay an initial deposit the first time based on your credit score!

Post # 9
Member
1379 posts
Bumble bee
  • Wedding: September 2017

I closed a VA loan back in December. There really is no down payment necessary, you get a lower interest rate, you won’t have to pay PMI, and here is something I didn’t know. You can ask for up to 4% of the purchase price back in seller concessions. You can use them for closing costs or other things, like credit card bills or paying off your car loan. No other type of loan allows this, so it’s pretty cool. The only drawback to that is, if you live in a sellers market, chances are you can’t ask for a seller concession without bidding over the asking price. But if you’re willing to pay over asking and you want to pay down your CC bill (which is likely over a 20% APR), it makes so much more sense to wrap it into the mortgage at a 4% APR.

 

 ETA- I think your credit must be a minimum of 640 for most loans. But check with your lender

Post # 10
Member
3669 posts
Sugar bee

One way you can raise your score is to use a revolving account. I noticed that in the months I use my Kohl’s card, my score goes up a few points – average of 5 points.  So now I make one small purchase every month, typically one pair of socks if I don’t really need anything. The minute I get home I log on to online banking and pay it so I don’t forget! 

It doesn’t matter how much you spend, just that you charged it on the revolving credit type card, and paid it on time. That’s what the credit bureaus look at.  It can be any revolving credit card – Macy’s, a gas card like Bridal Party, etc.

If you don’t already have one of these types of cards, don’t get a new one if you’re looking for a loan within 6 – 8 months, because opening a new line of any type of credit dings you for awhile. If you’re going to wait a year, open one soon, and request a low maximum, like $500 so it doesn’t add too much to your total available credit.

 

View original reply
sassy411  is right about the FICO forums – really great advice on how to raise your score. Link to the Rebuilding Your Credit subforum is below:

http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/bd-p/rebuildingcredit

Post # 11
Member
2643 posts
Sugar bee
  • Wedding: December 2009

I found through my research there were a lot of varying factors.  Maybe you have a low credit score, but have good deal of liquid assets, a high residual income, low DTI, etc.  I found that one bad factor wasn’t enough to necessarily disqualify you from getting a home.  DH and I had ok credit scores, not a great DTI, but our residual income was way more than what was required.  In the end, it was our high residual income than helped compensate our less than desirable DTI ratio.

And while yes, there is 0 down payment requirement, you’ll still need some money going into the process (earnest deposit, ours was $3k, money for inspections, etc).  Also, you’ll be paying the VA funding fee upfront (rather than paying PMI).  Granted, you can roll the funding fee in the loan, but I know some like to pay that out of pocket.

My biggest piece of advice is going through a lender that is experienced with VA loans.  I went through a local bank and my VA loan was the first one my loan officer had done.  In addition to that, they had just gotten a new underwriter and it was his first VA loan.  There was a TON of double checking and correcting on my part.  They were great and worked hard, but a great deal of information would have fallen between the cracks if I hadn’t done my research and stayed on top of the whole process.

Post # 12
Member
2819 posts
Sugar bee

Sign up for a CreditKarma account. It’s free and it will tell you your current score, offer tips on how to improve your score, and a score simulator so you can see how your score will be effected by things like applying for a new card or paying off a balance. I didn’t have credit cards until my early twenties and it took me a long time to build credit, so I found that site helpful for tracking my score and learning how to raise it. 

How much you can improve his score in a short timeframe really depends. For example, one of the biggest factors of your credit score (and one of the easiest to change) is your debt to overall credit ratio. So if he is carrying a high balance or has low minimums, that’s going to be your easiest way to improve in a short amount of time. So first off, if he’s carrying balances, the best thing he can do is to continue to make on time payments and try to reduce the balances as much as possible. Next, he shouldn’t apply for new credit now, but he should call the companies that service his current cards and ask for credit increases — but only the kind that they’re willing to do based on current info (payment history, salary, etc), not the kinds that require hard checks. They should tell you if they will need to do a hard inquiry. I have had success with a few of my card limits being increased this way. These are the best ways to increase debt to credit ratio without applying for more credit, which can adversely effect your score because a hard inquiry will be required. 

Other factors like length of credit history and number of inquiries are harder to change since they require more waiting it out. That said, those are usually lower ranked in terms of how they effect your score, so I’d work on the things you can improve and also give it time if old inquiries are about to fall off the report or if you’re coming up on a card anniversary that will shift you from an average age in one category to another. 

Post # 13
Member
10991 posts
Sugar Beekeeper
  • Wedding: City, State

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JsDragonfly :  

VA requires a 620 minimum. Non negotiable.

Post # 14
Member
5077 posts
Bee Keeper
  • Wedding: December 2014

We have a VA loan. 

DH, also a marine, trashed his credit score down to the low 500s. We were able to get it up to the low 700s within a year or so. That was where it was when we got the loan. You will need to get his score up to at least 620, but that shouldn’t be too hard to do fairly quickly. Feel free to PM me about how we did it, but some of the things were…

– I added him to my oldest credit card, this improved his length of credit history as well as his credit to debt ratio.

– We disputed his collections accounts with the credit reporting agencies. Most of these were things that he didn’t even remember or swears that he paid or shouldn’t have had to pay. They all came off, that was huge jump. 

– We got him a credit card. A small one that he used a couple times a month and paid off.

 

We also signed up for Credit Karma, which is great for monitoring the items on your credit report. The score they give is not your FICO score, so it’s not totally accurate, but can be a decent guide for how you are doing. It can also give you tips and show you what factors are influencing your credit and where you can improve. This updates weekly, I still check it every week.

The VA loan requires no downpayment. You do have the VA funding fee, but if he has a service connected disability for which he receives compensation, that is waived. If he does have a service connected issue for which he hasn’t filed for disability, he needs to do that immediately. Like PP said, you can ask for concessions from the seller, but be aware that you may not get them. We had to pay our own closing costs, so make sure you do have money to cover things like that in case. 

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annawalshhh :  

Post # 15
Member
159 posts
Blushing bee

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lovesbooks99 :  the bf and I are looking at houses and the mortgage lender said not to even bother putting my name or info on the application since my debt ratio is so high from college. It’s going to be all him.

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