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VA Loan with poor credit

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Anonymous
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VA Loan with poor credit

   Hey all, I'm looking for some advice here. I'm looking to figure out the best course of action. I'm getting out of the military this year and I am looking to buy another house. I currently have one where I'm stationed that I am thinking I'll have to sell or rent in order to get another VA Loan (I know about second-tier entitlement and its use, I'm more concerned with trying to figure out whether or not it's possible to even get a loan in my position). 

   Either way, my scores are median around 585, I have 1 late payment from Navy Federal CU that I am trying to get them to remove (haven't seen much success with them from other members). I won't be putting my wife on the mortgage since her credit is worse than mine and has no income since she watches our kids. I'm fairly spun up on everything I need to do to improve my credit. I only have that 1 late payment, no collections, and no delinquencies aside from the 1 late payment. The reason my credit is so low is we had a medical emergency we had to use a lot of credit for and haven't been able to pay off, yet. I'm at 95% utilization on $20,000 of line. 

   My problem is I don't see my ability to fix these problems in a short period of time, so I'm trying to figure out how to get a VA Loan or any options for moving back to my home state (GA). Has anyone been in this situation before? I'm thinking it might be that I end up having to rent, but last time I had to rent, my credit was great so I don't understand that process either with low credit.

7 REPLIES 7
Anonymous
Not applicable

Re: VA Loan with poor credit

Welcome to the board.  I am sorry to hear about your medical emergency but your best course of action right now is to rent and work on at least getting the utilization down.  If you are at 95% of your credit line, it will me hard to get qualified for anything.

Message 2 of 8
Anonymous
Not applicable

Re: VA Loan with poor credit

Thanks for that piece. I have begun to assume that would be the best course of action. I've found some nice places to rent when I move, and it'll be easier to rent my house here if I rent where I'm going with the having to deal with second-tier entitlement and such. I appreciate confirming and adding to my thoughts.

Message 3 of 8
Anonymous
Not applicable

Re: VA Loan with poor credit


@Anonymous wrote:

Thanks for that piece. I have begun to assume that would be the best course of action. I've found some nice places to rent when I move, and it'll be easier to rent my house here if I rent where I'm going with the having to deal with second-tier entitlement and such. I appreciate confirming and adding to my thoughts.


You are welcome... Hang in there..

Message 4 of 8
RickyRay
New Contributor

Re: VA Loan with poor credit

Its been a while since I have been on here. Just also just applied for navy fed. I asked if I would be eligible to join. I am disabled and not a vet but my father was and grandfather. They said yes. I mailed my info 3 days ago. I only get $1002 month socsec disability. Is there income guide lines to join? I do own my own home and hope to get a loan to upgrade it. I have very little debt just 2 credit cards cap 1 and a comenity bank Blair card. Also a Grand point account from 5/years ago paid off. My scores are all at 700 or higher. Cap one pre qualified me for Fannie Mae but that's to buy a home. I don't want to move. I want a home improvement loan. My place is not worth much but only need about $15000 to do this. I am low income but is it possible this could work out with navy federal? They did say that I was able to join thu.
I don't think they would ever give me a cc
But a checking and savings is good. What do you think are my Chance's. Thanks.
Well I don't have a logo, so I will just use @#@
Message 5 of 8
babbles
Established Contributor

Re: VA Loan with poor credit

Just curious, me and my wife are active duty as well.   You have acquired medical bills while on active duty if I read right??  My apologies if I read your post wrong.

Message 6 of 8
Anonymous
Not applicable

Re: VA Loan with poor credit

I think you will be able to get a VA loan in the future, but it will likely take some time.

 

My husband and I started out with credit in the low 500 range.  It took us about a year of fixing it, and we got approved for a VA loan with my mid score at  630 and his at 660, 3.5% APR with 0 money down, $280k loan. 

 

If you pay timely on your $20k loan each month, that should help your credit and as the balance goes down, it will look better.  We had a large installment loan as well, but the utilization didn't matter as much because our debt-to-income ratio was quite good.  As long as you can keep your debt-to-income with all your loans and mortgage under 40% you should be okay even with a higher balance on an installment loan. 

 

When was your last late payment?  We didn't have many lates, but the lender wanted a full 12 months from the last late. 

 

Do you have any open CC's?  You might want to work on getting a few more positives on your account.  Even a secured card kept at low usage should help increase your scores.  I'd do it now so you can let it age for a few months. 

 

If you currently have a house now, and your paying your mortgage each month, that should also help your score. 

 

We called veteran united, but they rejected us with scores in the low 600s.  We found a local lender who said as long as our mid score was 620, we'd be good to go, and that turned out to be true for us. 

 

I do think you'll be able to qualify for a VA loan again, but I wouldn't anticipate it being in the next few months.  Just keep working with your scores and learning about credit and you will get there.  Renting is not so bad in the meantime.  Good luck! 

Message 7 of 8
StartingOver10
Moderator Emerita

Re: VA Loan with poor credit


@Anonymous wrote:

   Hey all, I'm looking for some advice here. I'm looking to figure out the best course of action. I'm getting out of the military this year and I am looking to buy another house. I currently have one where I'm stationed that I am thinking I'll have to sell or rent in order to get another VA Loan (I know about second-tier entitlement and its use, I'm more concerned with trying to figure out whether or not it's possible to even get a loan in my position). 

   Either way, my scores are median around 585, I have 1 late payment from Navy Federal CU that I am trying to get them to remove (haven't seen much success with them from other members). I won't be putting my wife on the mortgage since her credit is worse than mine and has no income since she watches our kids. I'm fairly spun up on everything I need to do to improve my credit. I only have that 1 late payment, no collections, and no delinquencies aside from the 1 late payment. The reason my credit is so low is we had a medical emergency we had to use a lot of credit for and haven't been able to pay off, yet. I'm at 95% utilization on $20,000 of line. 

   My problem is I don't see my ability to fix these problems in a short period of time, so I'm trying to figure out how to get a VA Loan or any options for moving back to my home state (GA). Has anyone been in this situation before? I'm thinking it might be that I end up having to rent, but last time I had to rent, my credit was great so I don't understand that process either with low credit.


Have you explored the possibilty of selling your current home? Speak to a couple of Realtors in the area to see what your home is worth now and what you would have in proceeds.   It could free up your debt, depending upon the proceeds, so that you could purchase in the new location. If you have enough in proceeds you may be able to pay down your medical debt or even pay it off. You may not have a lot left over, but at least you would get rid of the debt. 

 

I agree with the poster above that said to work on your credit (and your wife's too) so you are elgible to purchase.

I know you said she won't be on the loan, but this is one of those togetherness activities that you both can do - even if she isn't going on the mortgage. You will both be moving in the same direction toward a common goal. 

 

I mention selling your current home because it isn't always wise to keep the old one. Especially since you would have to include the debt from the current home in your ratios which could severely impact the new purchase. Free yourself of that debt and completely embrace the future. JMO.

 

 

Message 8 of 8
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