VA Loan Build Your Credit
VA Loan Build Your Credit plays an important role in every potential home buyers’ ability in Miami to receive a loan for the home of their dreams. Prospective homebuyers of Miami hoping to use their VA benefit will see that credit not only helps determine approval for the loan but also plays a role in the interest rate your quality for.
When considering purchasing your home with a VA loan, striving for a good credit score is an excellent starting point in Miami.
Credit scores and VA lending
Credit scores play dual roles in Miami; helping both lenders and prospective homebuyers in the VA mortgage process. Simply put, your credit score is a risk indicator, helping ensure you are a safe “bet” and that the loan will be repaid on time. This is not only meant to protect lenders of Miami but to safeguard potential homeowners from being allowed to borrow more than they can handle.
A common worry amongst military families in Miami is the additional challenges when it comes to building and maintaining a good credit score. Frequent relocation, deployment, and other issues can take a toll on finances. Luckily, most VA lenders in Miami have a credit score requirement of 620, and veterans united is no different in that respect. But what sets veterans united apart is its special focus on veterans who may fall below the credit score requirements.
What should I do about my low credit?
Potential VA loan home buyers in Miami shouldn’t abandon their dreams of home ownership on account of a low credit score.
With a little hard work, your credit can change, and you can build your credit but knowing what improvements to make can be tricky. That’s where the veterans united lighthouse program can help.
The veterans united lighthouse program is a free service that provides potential home buyers with the tools to improve their financial profile. And, since 2008, the veterans united lighthouse program has helped more than 8,000 previously denied borrowers close on a home.
Working with the lighthouse program is a free process, but not necessarily an easy one. Building your credit requires commitment and hard work.
Buying your home and financing it with your VA home loan benefit is an exciting time. Yet not so exciting when the borrowers find out their credit score is too low to qualify for a mortgage in Miami. In fact, it’s very disappointing. VA loans are more forgiving as it relates to credit scores compared to other loan types. But there are minimum standards that the VA requires; and it is incumbent upon the VA lender to independently determine the veteran has demonstrated a responsible credit history.
The VA does not establish a credit score requirement, only that the lender must determine creditworthiness. Lenders in Miami use credit scores as an indicator of the likelihood of defaulting on the loan with scores ranging from 300 to as high as 850. The higher the score, the better the credit and while the VA doesn’t have a score requirement, most VA lenders do set the minimum at 620 or 640, depending on the lender.
How scores work in Miami
Credit scores in Miami are a reflection of past credit patterns, with emphasis on the most recent two-year period. The older the credit, the less important it is. The calculation is a result of applying an algorithm developed by Fair, Isaac Corporation, commonly known as FICO. Businesses report the payment patterns of their customers to one or all three of the main credit bureaus, Equifax, TransUnion, and Experian.
These bureaus use the FICO method to produce the three digit score; and while the three scores are usually similar they are very rarely exactly alike. This variance is due to the reporting requirements and dates the information is delivered to the three bureaus. When a veteran applies for a VA loan and credit is pulled, the credit scores may read something to the effect of 741, 738 and 745. Which score does the lender use? VA lenders throw out the highest and lowest score and use the middle one for loan evaluation.
There are five categories that comprise a score and they are;
- Payment History (35%)
- Account Balances (30%)
- Length of Credit (15%)
- Types of Credit (10%)
- Inquiries (10%)
Each category has its own impact on the total score, with Payment History and Account Balances accounting for two-thirds of the overall score. The length of credit is how long the applicant has used the credit I the past, types of credit applies to loans from different types of creditors such as a mortgage lender or finance company and inquiries accounts for new credit applied for. Applying for new credit while applying for a mortgage at the same time is discouraged. This because it will hurt the score and the VA lender will want documentation of the inquiry; making certain no additional credit has been granted.
Now say the borrower has a middle credit score of 550. What steps must be taken to build the score? The first method is to make certain the negative information in the file is correct. If there is a blatant error that is hurting the score, the borrower can provide the necessary documentation to the VA lender who can work directly with the credit bureau to correct the error and re-run the score. That’s the easiest way if there’s a mistake.
If there’s not a mistake, the borrower of Miami should concentrate on the two categories of payment history and account balances. The others are certainly important but by taking care of the first two, the rest should take care of themselves.
Payment history looks directly at any late payments on your credit report. When a payment is made more than 30 days past the due date, it is reported to the credit bureaus. The same report is made when payments are more than 60 or 90 days late as well as when loans are sent to collection or charged off.
The quickest way to repair and build credit is to stop making late payments as this single category accounts for more than one-third of your score.
Account balances compare the outstanding loan amounts with available credit. If a credit balance is $5,000 and the credit card limit is $10,000 then the borrower is using 50 percent of available credit. This much debt, however, will hurt a score as the ideal balance to limit percentage is around 30 percent. As long balances increase and approach, or even exceed allowable limits, the credit scores will continue to plunge. The goal here is to pay down existing balances until they reach 30 percent of available credit and charge no more.
Concentrate on these two categories for the next six to eight months and you’ll see marked improvement and you are going to build your credit score. It’s a process and it may seem like a long time but over the next year, you will either have better credit or not. For those who want to improve their scores, this is the starting point.
A good credit score is an excellent starting point for anyone considering a VA Loan Build Your Credit in Miami. But what exactly is a good credit score? Does the VA have a credit score minimum? How do VA credit requirements stack up against other mortgage options? One of the best benefits of the VA loan program is its relaxed credit requirements. VA Loan Build Your Credit Now.
Potential borrowers in Miami don’t have to possess blemish-free credit reports and elite credit scores to secure VA financing. The VA loan program seeks to accommodate as many military buyers as possible with a simple and accessible mortgage in Miami.
If your credit isn’t too hot, don’t worry. Veterans United’s Lighthouse program is designed to help you improve and build your credit score; no strings attached. Get started VA Loan Build Your Credit Miami Today.
Do VA Loans Have Credit Score Minimums?
First of all, let’s understand the VA’s role in the VA loan process. The Department of Veterans Affairs oversees the program and guarantees a portion of each loan in case of default. But the VA does not issue loans, and the agency does not enforce credit score minimums. Both of those duties are handled by an individual VA lender in Miami in the case of this state.
Most VA lenders in Miami do use credit score benchmarks. Applicants with scores below a lender’s benchmark usually can’t be approved for VA financing. That minimum will vary from lender to lender; but most VA-approved lenders, including Veterans United Home Loans, are looking for a credit score of at least 620.
Finally, we can say that Potential VA loan borrowers of Miami don´t need to abandon their dreams of home ownership due to a low credit score. The best feature of credit is its fluidity. Your credit changes constantly. Improve your fiscal habits, and your credit score will soar. But knowing how to build your credit can be tricky. Should you pay off high-interest debt? Should you cancel certain credit cards? How should you handle that bankruptcy looming over your credit report? If you’re considering a VA loan build your credit but need a credit boost; get some free help from the Veterans United Lighthouse Program. VA Loan Build Your Credit
Lighthouse works tirelessly (and at no charge) on behalf of service members who fall short of VA loan requirements. Working with Lighthouse is a free process, but not necessarily an easy one. Improving your credit requires commitment and hard work. If you’re ready to make the necessary changes in pursuit of a VA home loan, partner with a helpful advocate. VA Loan Build Your Credit