What can affect your chances of getting the Best VA loans for bad credit in Chicago, IL? Read below to know the factors that affect your VA loan approval.
When deciding whether or not to approve a house loan, VA lenders will look at the borrower’s previous credit history. A borrower who has made on-time payments for the last 12 months acts as a guide and demonstrates their willingness and capacity to repay greater debt in the future. On the other hand, a borrower with a history of consistently late payments, as well as judgments and overdue accounts, is unlikely to be approved for a loan.
To be qualified for a VA loan, you don’t need to have a certain credit score. Individual lenders, on the other hand, are usually the ones who make these loans. To learn more about the precise credit score criteria for obtaining a VA home loan, contact VA loan consultants. There are a number of things that might affect your credit score and your ability to qualify for a VA loans for bad credit in Chicago, IL.
Inadequate Credit History
When it comes to credit, a lack of credit history isn’t necessarily a barrier to a loan acceptance. Decent payment history on items such as rent, utilities, phone bills, and other expenses, as approved by credit standards, can be used to determine satisfactory credit history.
A borrower who has had a prior dwelling or other real property foreclosed on or awarded a deed-in-lieu of foreclosure within the last two years is typically ineligible for a VA-insured mortgage. If the foreclosure occurred on a VA loan, the applicant may not be eligible for the full amount of the new loan. Following a short sale, certain lenders will not need a waiting period.
Judgments, Collections, and Federal Debts
Lenders may have a collection debt maximum permitted threshold. These limits might differ depending on the lender and other circumstances. Prior to closure, all judgments must be paid in full. Borrowers who are behind on any federal debt may be required to enroll in a repayment plan with a track record of timely payments.
Although the VA loan does not have a set credit score criteria, each lender may have its own minimum score requirement or norm. The credit score criteria are purely subjective and will differ significantly from one investor to the next. Collections, judgments, and other outstanding debt may prevent a lender from giving a loan, albeit such financial hardship does not always result in an automatic refusal. Most lenders will want an acceptable explanation for any late payments made in the 12 months prior to the loan application.