Bad Credit Stipulations for VA Home Loans

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Bad credit VA home loans are often available to men and women of the armed forces. VA home loans are made through private lenders and are then guaranteed by the Department of Veterans Affairs. This allows private lenders to extend the loans to less qualified persons while maintaining a low interest rate. The Department of Veterans Affairs is uniquely positioned to understand factors that decrease your credit score while you are serving in the armed forces. There are several factors leading to the generally lower credit among veterans, and these factors will be considered when your loan application is submitted.

Short Credit History

One reason many veterans have low credit scores is the lack of loans they have assumed in their lifetime. Veterans carry very low debt loads for a number of reasons. First, many veterans today do not take student loans even if they attend college. The ROTC programs available cover the vast majority of expenses associated with attending college for a number of veterans. Even if a person does not go to college, he or she may be able to avoid taking on debt by joining the armed forces at a young age. Veterans do not often have car loans, credit cards or other debt because they are removed from needing these items at a time when many young people are building their credit scores.

Lack of Financial Services Abroad

When a man or woman is deployed abroad, there is often a lot of difficulty in paying bills and debts back home. While it is ideal to think direct payment methods available through banks today will overcome this issue, these veterans may not be able to speak with their bank to handle issues that may arise even if they can set up a good system. If you have ever had an unexpected bill or overdue debt while you are serving abroad, you know how hard it is to address the problem. Credit can easily drop within even a few months of a person being overseas.

Securing a Loan with Bad Credit

It is normal for a veteran to have a lower credit score when exiting service. VA home loan guarantees are designed to address this problem. They are available at a lower down payment than is required for other private-sector loans. If your credit is low for another reason, such as an outright default on another loan or because you are carrying too much debt, then you may not qualify even under the relaxed standards. However, if your credit score is low because of expected problems like those mentioned above, you will likely still be approved for a VA home loan if you meet the service requirements. You will likely be eligible if you served abroad during a time of war. Even if this does not describe your situation, you may be eligible under a number of other opportunities to use a VA loan. Complete details on eligibility based on service can be located on the Department of Veterans Affairs loan website.