VA Loan Reader Question: Will a Lack of Credit History Hurt A VA Loan Application?
A reader asks, “My husband is a veteran with a very good job and we would like to apply for a VA Loan in a few years, but he does not have much when it comes to credit history. We recently purchased a vehicle in his name, which will be paid off within 5 years.”
“I was curious if that would be considered to be a major help with building a good credit that will help when it comes to building credit history for a VA Loan?”
There are two things borrowers should remember when considering a VA home loan. The first is that the VA loans are processed by a lender who will examine a borrower’s credit history looking for a pattern of reliable payments over the last two years or more. The second is that those payments don’t necessarily have to be on credit cards or loans.
The VA program allows the lender to develop “non-traditional” credit history information when a borrower lacks credit card, personal loan or similar types of payment data. Your payment patterns for apartment rentals, student loans, even utility bills and telephone bills can count when it comes to establishing you as a good credit risk.
Just because there’s no lengthy history of credit card use, car payments or other information doesn’t knock a borrower out of the running when it comes to a VA home loan.
Borrowers who worry about their past track record for on-time payments should start working far in advance of applying for a VA mortgage to establish a solid record of on-time payments over a year or more. It is also a very good idea to speak to a home loan counselor about other things that can be done to be a stronger applicant for a home loan. Contact your nearest VA Regional Loan Center for more information.
When you are ready to apply or pre-qualify for a VA home loan, you can contact a participating VA lender to get started online.
About Joe Wallace
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association.