What Credit Score Do You Need For a VA Home Loan?

Eligible veterans and active-duty service members in America can apply for a VA loan to invest in a home. The U.S. Department of Veterans Affairs guarantees this mortgage to benefit borrowers. 100% financing and low interest rates are major advantages of choosing this loan. But, the department has not set the minimum credit score needed for VA loan. So, private VA lenders have the right to determine credit score requirements for borrowers. 

Do You Need a High Credit Score for a VA Loan?

Government-backed VA mortgages ensure better protection for lenders. So, most lenders approve applicants with low credit scores. The US Department does not directly issue the loan but provides partial guarantees for those who have met the major qualifications for VA loans. Thus, it reduces the lender’s risks while providing a loan to a person with low credit scores. Still, you can contact the lender to know about the VA home loan credit score requirements.

Increase Your Credit Score and Get VA Loan Approval Easily

Although you may receive the loan with less-than-perfect credit, it is better to increase your credit score before applying. Most VA home loan lenders in South Carolina​ prefer applicants with at least a 620 FICO credit score.

If your current credit score is below this benchmark, try to increase it in a few ways.

Improve Your Financial Habits – You must be more responsible while dealing with finances. Reduce your debt and avoid late payments on your monthly bills.

Check Credit Usage – Your credit card balances should be low compared to credit limits. High credit usage adversely affects your credit score.

Look for a Credit Consultant – The best credit consultant will provide advice based on your current financial status.

Ensure a Better Debt-to-Income Ratio – Lenders will check your DTI to know your earnings and the amount owed to creditors. You can reduce your debts to improve the ratio.

Limit New Credit Application – A new application can directly affect your credit score by almost 10%

These are a few ways to increase your VA loan credit score and get approval from the lender. 

Why is a VA Home Loan Better Than Other Mortgages?

A VA home loan is better than a conventional mortgage because the latter has no government backing. As the lenders face a higher risk, it is challenging to obtain a traditional home loan. Also, you will need a higher credit score to get your application approved. 

There are also FHA loans with low credit requirements. But, you need to make a down payment of at least 3.5%. The USDA loans are also government-backed mortgages; however, they are available only in rural areas. Thus, VA mortgages are better for many when buying a new home. 

Conclusion

The minimum VA mortgage credit score to be eligible for the loan is low. Still, you should try to increase your score to get approval easily. Contact a reliable broker in South Carolina for personalized advice.