It is not something new that the credit score plays an essential part to play in the home-buying process. If you have a strong credit score, you can fetch more benefits. In this way, you can secure better interest rates. If you are applying for a VA loan and not a conventional loan, the score is essential. Since the VA-approved lenders impose a credit score requirement, you should put a focus on it.
For securing VA home loan credit score 550 in Houston, TX, you need to remember a few things. The Department of Veterans Affairs does not set credit score requirements. Now, this might be confusing for the first-time homebuyers. The lenders set the credit score requirements because a credit score is similar to a tool. It indicates whether you are willing or can pay off the debt. The mortgage lender offers the loan after knowing that you are at risk. If you manage to carry at least 580 credit scores, you can apply for a VA loan. Of course, it does not end right here, there is more to know. So, go through the rest of the article and prepare.
Credit Score is Linked to Borrowing Costs
The moment the VA lender reviews credit scores, he forms an instant judgment about whether you can pay down the debt. When your credit score is high, you can pay back on time. There is also a chance that you are not likely to miss the monthly mortgage payments. People who have high credit scores prove that they are more responsible. Your credit score has a role in fixing the cost of borrowing. If your credit is high, you can grab the lowest interest rates. In this way, you can save years of savings at a time.
No Credit History is a Red Flag
If you thought the lack of credit history is not an issue amid the bad credit debacle, you are not thinking at all. Damaged credit is as bad as having no credit score. The Department of Veterans Affairs might be OK, but the authority does not offer the loans. You can buy the VA loans only from the lenders. So, the borrowers who do not have an established credit score must spend enough time to build a credit profile. Of course, the guidelines vary from one lender to another, so you should gather necessary information.
Veterans Paying Chapter 13 Bankruptcy
Having spent years overseas and struggling with low credit after returning – this is a common scenario for active-duty members and veterans. According to the VA guidelines, the buyers can apply for a Chapter 13 bankruptcy. The waiting period is generally one year, and you can rebuild your credit again. Additionally, you can seek approval to proceed from the court trustee. The borrower needs to reshape the credit score and maintain a stable work experience.
In the end, you should talk to the professional lender about the credit score requirement and other guidelines. The experienced lender usually walks the borrowers through the process.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.