Getting a VA mortgage means you need a decent credit history. Not perfect mind you, but you do need to show a responsible handling of credit. VA lenders can have their own minimum credit score requirement, the VA itself doesn’t have a minimum, and most minimum scores are somewhere around 620 to 640, depending upon the lender. If your score is below 620, or you think it might be, there are ways to improve your credit score to get your credit back to the level considered “excellent” or above 740.
Credit scores use a complicated system that evaluates recent credit patterns then assigns a three digit number to that history ranging from 300 to 850. There are five separate categories that are analyzed, payment history, available credit, length of credit history, types of credit and recent inquiries. While there are five, two of them make up nearly two-thirds of the scoring calculation: payment history and available credit. By concentrating on those two items alone, the other three will take care of themselves.
Payment history is nothing more than making your monthly payments no more than 30 days past the due date. The available credit category looks the difference between your loan limits and your current loan balances. The ideal available credit spread is approximately 70 percent, meaning your current outstanding balances should approximately 30 percent of your credit lines.
Credit scores pay more attention to recent activity and little to older payment patterns, with the most recent two years’ of history being the most significant.
If you find your scores are in need of some help, for the next several months, simply make your payments on time and pay your loan balances down to about 30 percent of your credit limits. Don’t be tempted to apply for new credit, as a new inquiry will suppress your score, but wait for a few months and let your new payment history and loan balances simmer. Soon, you’ll have an improved score, much higher than when you started out.