When you apply for a VA loan, having a good credit history will help you to get approved. You cannot have made any late payments for the past twelve months. If you are currently resolving any past-due credit, make a list of the creditors along with how much you are repaying them each month. Give the list to your lender so they will see that you are not ignoring your past-due credit, that you are actively repaying the creditors.
The following list of credit-related issues may require an explanation before your VA loan can be approved:
- No Credit--If you have never had credit, show your lender a copy of your utility bills, cable bills or any statements showing payments that you make on time each month. This will give your lender an idea of how you manage your finances. No credit does not always mean an automatic denial on your VA loan, as long as you show your lender a history of prompt repayments.
- Late Payments--If you have had any delinquent credit in the past, any loans that required the creditor to file a judgment must be paid in full or in the process of being paid. If your payments have not been late for the last twelve months and you are paying down your past delinquent credit balances, your lender may be able to approve you for a VA loan.
- Chapter 7 Bankruptcy--You must wait at least two years from the date of discharge before you can apply for a VA loan. You must show a record of solid employment. You will have to provide a written explanation of why you filed for Chapter 7 bankruptcy. Any payments you made since the bankruptcy must have been made on time, or the VA will not be able to approve you for a loan.
- Chapter 13 Bankruptcy--You will have to show one year of payments made to the court that were on time, and your trustee will have to give your lender a statement that you are repaying the court on time. You must show a record of solid employment. You will have to provide a written explanation of why you filed for Chapter 13 bankruptcy. Any payments you made since the bankruptcy must have been made on time, or the VA will not be able to approve you for a loan.
- Foreclosure--If you had a home foreclosed on in the past two years or surrendered the property to avoid foreclosure, the VA will usually not consider you for a loan.
- Other--If you have accounts in collection, such as medical bills or small debt accounts, you can qualify for a VA loan if you are in the process of repaying the late accounts. Federal tax liens or court judgments have to be resolved or paid in full before the VA will consider you for a loan.