Using VA Loan with low credit score

Asked by Sandra Dunn, Arlington, TX Fri Aug 24, 2012

Hello every one. My husband and I are looking into hopefully buying a home for our family using his VA Loan for our family. Problem is we both have low credit scores in the 500's. Is there a way we can still qualify?

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12
Trevor Curran, Mortgage Broker Or Lender, Great Neck, NY
Sat Aug 25, 2012
BEST ANSWER
Misleading?

First, I've been in the mortgage industry 23 years. I've seen it all and I can PROMISE you from what I've seen in the REAL WORLD that pretty much ALL these credit repair companies are scam artists.

Don't believe me; that's fine. Here's the quote from the US Federal Trade Commission website which I linked to from my previous answer:

"Everyday, companies target consumers who have poor credit histories with promises to clean up their credit report so they can get a car loan, a home mortgage, insurance, or even a job once they pay them a fee for the service. The truth is, these companies can’t deliver an improved credit report for you using the tactics they promote. It’s illegal: No one can remove accurate negative information from your credit report. So after you pay them hundreds or thousands of dollars in fees, you’re left with the same credit report and someone else has your money. "

Does that help?

Trevor Curran
NMLS #40140
0 votes
Kelly Bowyer, Agent, Arlington, TX
Sun Aug 26, 2012
NOW we're getting somewhere...............good advice!
1 vote
Barbara Coker, Mortgage Broker Or Lender, San Antonio, TX
Sun Aug 26, 2012
The most important part of Trevor's quote from the FTC refers to "accurate information." If you really had the late payments, or you really have the collection accounts, you have some serious work ahead of you to build your scores up. However, if there are errors, you can dispute them yourselves through the bureaus. You can access each of your reports for free through annualcreditreport.com.
You don't need to pay for your scores. Then look through for errors, and make your disputes.

It's rather complicated, as you can see, if you have many issues taking your scores down. That is why I recommend an experienced loan officer. We can't give you specific advice on this site.

If you really want to buy a home, work to get your fiscal house in order first.

Good luck!
Barbara Coker
Licensed Mortgage Loan Officer
NMLS#228545
1 vote
Barbara Coker, Mortgage Broker Or Lender, San Antonio, TX
Fri Aug 24, 2012
I don't know of any VA lender who will go down to the 500's. I suggest you get with a good licensed loan officer, and credit repair specialist to look into the steps necessary to increase your scores.
Good luck!

Barbara Coker
Licensed Mortgage Loan Officer
NMLS#228545
1 vote
The United H…, Agent, Mansfield, TX
Sun Sep 2, 2012
While you are concerned with purchasing a house my suggestion is to hold off, build up your credit properly. Most things in life are worth working towards to gain success. The shortest route is not always the best route. Good Luck in your search and I hope you bring that credit score back up.
0 votes
Trevor Curran, Mortgage Broker Or Lender, Great Neck, NY
Sun Aug 26, 2012
Barbara hits the nail on the head, "...accurate negative information."

The truly misleading thing about credit restoration and "repair" is the false hope these scam-artists give to people whose dream it is to own a home. But a consumer cannot remove, repair, renovate, restore or rejuvenate a credit report that accurately reflects a negative credit item or items.

So what can a credit restoration person do? Again, as Barbara states, remove errors from the report. BUT the consumer can do that on her own, FREE of charge.

What do we mean by errors on a credit report? No, it doesn't mean the Collection account with JCPenney from 2009 that was never paid, nor the six months of late payments on the JCPenney account that led to the Collection account in the first place. An error is usually a misspelling of your name, incorrect address, or an credit account that belongs to a family member with exactly the same name (John Brown SENIOR instead of John Brown JUNIOR) that appears on your report.

The consumer has the choice of sitting down with a Licensed and experienced Loan Officer like me or Barbara who is willing to invest some time educating the consumer on how to prepare for the home ownership experience and responsibility of a mortgage payment. OR take my advice below: put your financial house in order and approach the home buying experience THE RIGHT WAY. There are no shortcuts to making this dream come true; the people who offered and accepted those shortcuts caused the great mortgage meltdown.

Trevor Curran
NMLS #40140
0 votes
Kelly Bowyer, Agent, Arlington, TX
Sat Aug 25, 2012
Anybody else have an opinion? I've seen it work in the real world. If it's ILLEGAL, there sure are a bunch of them doing business openly. "Buyer beware" in all things......that goes for lenders, realtors, & credit repair companies too!
0 votes
Kelly Bowyer, Agent, Arlington, TX
Sat Aug 25, 2012
The previous post is somewhat misleading in my opinion......not all credit repair is a scam. I don't doubt there are many that probably are, but there are also good reputable companies doing what they say they will do & well worth the cost. There is much you can do to help yourself, but you should really get some direction before you go doing things like paying off old debts. Sometimes this just causes more problems because of the way the credit bureaus report on these items. Sometimes they are simply reporting WRONG information. Again, I say talk to a good local lender who can help you navigate these tricky waters. They can look at your personal situation from a lending perspective.

Good luck!
0 votes
Trevor Curran, Mortgage Broker Or Lender, Great Neck, NY
Sat Aug 25, 2012
Good afternoon sandradunn85,

Please pass on my sincere THANKS to your husband for his Service to our Nation!

Here's my advice for you based on my 23 years experience as a Mortgage Banker:

First, settle any outstanding debt. If you owe money on collection accounts, charge-offs and/or judgments, make payment arrangements and get these accounts paid promptly.

Next, begin rebuilding your credit. If you have current accounts with good payment histories, or even some previous late-payment-blemishes, make sure you continue to pay those accounts on time. If you do not have any existing credit accounts then you'll need to establish several in order to create a viable credit history.

I have found that CONSUMER ACTION is an excellent resource for objective advice on all things credit related. You'll find free and sincere advice on everything from settling collection accounts to rebuilding credit to building credit from scratch on their website. http://www.consumer-action.org/

Beware of anyone offering to "repair" your credit! The Federal Trade Commission issued a stern warning last year that such offers are scams. Find more from the FTC HERE: http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm

The best way to buy a home is to have a decent credit history combined with sufficient Income and Assets for a home purchase.

The best way to have a decent credit history is to settle negative outstanding obligations and pay all your bills on time for at least two years.

Trevor Curran
NMLS #40140
0 votes
Kelly Bowyer, Agent, Arlington, TX
Sat Aug 25, 2012
It appears you're in Arlington, Tx. I've lived here for over 30 yrs with 28 of that in real estate. You do need a good loan officer willing to take a little time to look at your individual situation in order to see how to best improve it. It might be things you can do yourself. If you need a credit repair company, it's best to work with a reputable one that has a track record & accountability to more than just you. I can help there too. Even if you pay for that service, it will be worth it in the end if you can buy in the near future. VA requires very little cash investment up-front if you can just get your credit scores up, assuming everything else is in order as well. Just knowing what is required of you will help you move forward in the process. Knowledge is power!

PS....the market is brisk all year in this area with plenty of properties available to you with a VA loan. I can set up a property search directly from the MLS with your specific criteria so you can watch the market while you're working on your credit.

Give me a call or send an email direct if you'd like to talk more.

Kelly Bowyer
Scott Davidson Realtors
cell 817-93-2761
kellybowyer@yahoo.com
0 votes
Tommy Burris, Mortgage Broker Or Lender, Baton Rouge, LA
Fri Aug 24, 2012
What Barbara said......

Even if a lender would use a score that low.... It is likely that the reason for the low scores will get you denied.
You need to work on removing some negatives and adding positive credit at the same time.
0 votes
Michael Cheng, Agent, San Jose, CA
Fri Aug 24, 2012
Qualifying for a loan will be very tough. Also tough is finding a good quality property and winning the bid with a VA loan. Perhaps you should continue to rent for another 6 months. You can build up your credit scores, save up more money, and buy during the middle of winter when there's usually less competition.
Web Reference:  http://www.archershomes.com
0 votes
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