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. Some lenders may go down, but borrowers often incur additional scrutiny and lender requirements. This is because a higher credit score can improve your chances of getting approved for a VA loan and could also help you get a lower rate. However, if you have a particularly low credit score, you may need to look for one to qualify for a VA loan.
Interestingly, borrowers who use traditional loans have higher credit scores on average than those using the VA program in South Carolina. If you're wondering if your credit score meets the VA loan requirements, here's what you need to know. That's because lenders like Freedom Mortgage use your credit score to help determine your eligibility for a VA loan and establish your interest rate. For example, if during the mortgage loan application process, you buy a new car or open a new credit card, then expect a rapid drop in credit, which can negatively affect your loan application.
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. 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. If you have a credit score of 620 or higher, then you could qualify for a VA home loan with most lenders. In other words, the VA wants lenders to look at all of a loan applicant's qualifications, not just credit ratings (for example, while VA loans have no down payment requirements, someone with a low credit rating could get approved with a down payment.
If you're interested in getting a VA home loan or refinancing a current one, but you're not sure if your credit score is high enough, then you should talk to a lender. If a borrower has sufficient residual income, some lenders will even approve VA loans with credit scores as low as 500. Understanding what an appropriate credit score is a great starting point for anyone trying to get a VA loan. 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.
The VA doesn't issue loans and doesn't set a credit rating requirement, but its lenders typically do.
