We get a lot of reader questions on issues of credit, credit scores and what the VA standards are for married couples who apply for a VA loan together.

One recent question: “If one spouse has excellent personal credit, but the veteran spouse does not, is it still possible for to obtain a VA loan, if the loan is based primarily on the income and credit of the non veteran spouse?”

According to the VA Lender’s Guide, a married couple applying for a VA mortgage loan together must have sufficient credit. The credit histories of each applicant are examined and while income from one spouse could be used as a compensating factor for the other, the spouse’s credit cannot make up for deficiencies of the veteran borrower. The VA loan program requires lenders to examine the veteran’s creditworthiness and assess the risk before approving a loan.

That’s not to say there isn’t hope for borrowers who have made mistakes in the past and want to start fresh. According to Chapter Four of the VA Lender’s Guide, “If a veteran, or veteran and spouse, have prior adverse credit and are participating in a Consumer Credit Counseling plan, they may be determined to be a satisfactory credit risk if they demonstrate 12 months’ satisfactory payments and the counseling agency approves the new credit.”

The rules also add, “If a veteran, or veteran and spouse, have good prior credit and are participating in a Consumer Credit Counseling plan, such participation is to be considered a neutral factor, or even a positive factor, in determining creditworthiness.  Do not treat this as a negative credit item if the veteran entered the Consumer Credit Counseling plan before reaching the point of having bad credit.”

Participation in a consumer credit counseling program is a very good idea, which is another reason why VA loan experts often recommend taking at least one year in advance of the loan to prepare.

That year can give a potential VA borrower plenty of time to establish good credit habits, work on past credit mistakes or even challenge erroneous data in a credit report. For more information on getting into a consumer credit counseling program, contact your nearest VA Regional Loan Center for advice: http://www.benefits.va.gov/homeloans/rlcweb.asp