I receive a lot of questions regarding loans, but with so many changes, I refer now a days to the mortgage profesionals. This is good information for our military buyers.
Call me at: 757-502-5324
VA borrowers can’t be approved for a VA home loan or pre-approved for a VA mortgage without the lender requesting a credit report on the borrower. What are the VA requirements for these credit reports? What should borrowers know?
The VA requites either a three-filed Merged Credit Report or a Residential Mortgage Credit Report. Regardless of which reports are used, they must be 120 days old or less for VA loans except new construction loans—then the credit reports can be 180 days old or less.
Credit reports must be issued by what the VA calls a “reputable credit reporting agency”, usually one or more of the “big three”, Equifax, Experian, and TransUnion.
When a Residential Mortgage Credit Report is used, the VA requires full reporting of creditor names, current status, payment history and other relevant details. The Residential Mortgage Credit Report must be an original document and the VA requires it to contain a two-year employment history.
Regardless of the type of credit report used, the VA also requires rent and mortgage payment history. According to the VA, “Housing expense payment history is often the best indicator of how motivated the applicant is to make timely mortgage payments in the future.”
For VA borrowers with little or no credit history, the VA allows a spouse’s lines of credit to be used if the applicant can use them to demonstrate his or her own credit payment history related to those accounts. Specifically, the VA states:
“Upon the applicant’s request, the lender must consider any account reported in the name of the applicant’s spouse or former spouse that the applicant can demonstrate accurately reflects the applicant’s creditworthiness.”
That means it’s up to the borrower to request this—the VA won’t automatically ask for a spouse’s credit information or consider it. There are other rules governing spouse income and credit as they relate to the applicant’s creditworthiness.