There is no minimum credit rating requirement. Instead, the VA requires a lender to review the entire loan profile. I received a notice that Freedom Mortgage purchased my loan. The VA does not set a minimum credit score for the VA loans it guarantees.
Instead, ask lenders to view the full loan profile of the person applying for a VA loan. However, lenders can set their own minimum credit scores for VA loans, so you may see that different lenders require different scores. Despite this VA flexibility, many individual lenders do impose a minimum credit rating requirement on VA loans. Generally speaking, lenders will require minimum credit scores of 580 to 620 to qualify for a VA loan.
However, today, the approval process is fully performed by approved VA lenders. The VA does not approve the loan, but it does issue the requirements that lenders must meet if the lender expects to receive the loan guarantee from the VA. From debt ratios to employment history, it all depends on the lender. And that, of course, includes the creditworthiness of the borrower.
If you're wondering if your credit score meets the VA loan requirements, here's what you need to know. So, while VA loans have no down payment requirements, someone with a low credit score could get approved with a down payment. Fortunately, the Department of Veterans Affairs offers VA loans to you and other qualified veterans and active-duty military personnel that ease credit requirements. These numbers are suggestions and you may still be eligible for a VA home loan if your credit is below average.
It's true that bankruptcy or foreclosure can stay on your credit report for seven years, but that doesn't mean you have to wait that long to use your VA home loan benefit. VA loans allow for bankruptcy in the past as long as two years have passed since the date of repayment and credit has been reinstated. In other words, the VA wants lenders to look at all of a loan applicant's requirements, not just credit scores (e.g., while a low credit score won't necessarily prevent you from getting a VA loan, a higher score can mean better interest rates or loan terms. There are many guidelines that the VA has for the loans it supports, but a minimum credit rating is not one of them.
If a borrower has sufficient residual income, some lenders will even approve VA loans with credit scores as low as 500. It may be a good idea to improve your credit score even when it is higher than the minimum your lender requires for a VA loan. A good credit score is a great starting point for anyone considering a mortgage, including a VA loan. While the VA itself doesn't set a minimum credit score required for a VA loan, most mortgage lenders will want to see a credit score higher than 620 FICO.
