Consumer credit scores have taken a beating in the last three years.
Close to 21 million Americans saw their credit score plummet more than 50 points during the housing market and economic meltdown of 2008-09, according to FICO, which produces a key score for the lending industry. In all, about 50 million consumers lost more than 20 points from their score.
Hits to your credit can make it secure a home loan, especially in the current market, where lenders nationwide have tightened requirements in response to the subprime mortgage crisis. But one of the biggest benefits of the VA loan program is its flexibility and less stringent requirements when it comes to credit.
The average credit score for an FHA mortgage is now around 700, according to syndicated columnist Kenneth Harney. That figure is closer to 760 for mortgages originated by government-sponsored enterprises Fannie Mae and Freddie Mac.
In the current climate, VA lenders are typically looking for a score of at least 620. That's a considerable difference. What's even more powerful is that qualified borrowers can get competitive interest rates on a VA loan with a score in that range.
Prospective VA borrowers with lower scores might struggle to secure a home loan right now. While it can seem daunting, repairing your credit score is often a matter of patience, time and diligence. There are no quick fixes, but hard work and a firm commitment can get prospective homebuyers on the path.
We also have a unique department that helps service members and veterans develop their own plan (for free) to repair their credit and get ready for loan prequalification. You can learn more about our Lighthouse Program at our sister site, Future Military Homeowners. Call a credit specialist at Lighthouse anytime at 888-392-7421.
Military consumers with credit trouble can turn things around and utilize the home loan benefits earned by their service.
The key is persistence and sincere dedication to making responsible financial decisions. Consumers can do all of the heavy lifting on their own when it comes to cleaning up their scores, from disputing errors and getting balances below 30 percent of the limit to consistently monitoring their reports.
If you're unsure of how to rebuild your credit, talk with one of our Lighthouse credit specialists today. They help veterans and military families get a clean slate and put themselves in position to obtain the VA home loan they deserve.
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