Many veterans these days are finding that once they exit the service buying a home is the next move. The dream of owning your own place after travelling around the world in the military is really appealing. You may know about VA home loans and be wondering what assistance they can offer you. However, if you have bad credit due to bankruptcy you may also worry that your poor credit score will disqualify you from the benefits of a VA home mortgage.
Credit Checks by the VA
When you want to apply for a home loan through a VA sponsored lender, they will review your credit as with any other loan. The presence of a Chapter 7 Bankruptcy is the biggest point against you in getting the money you need. Chapter 7 is when all debt is expunged without any form of repayment.
Generally, you need to wait a minimum of two years once the bankruptcy is processed to even consider getting a loan. However, the circumstances of that bankruptcy (such as medical bills) can influence the likelihood of getting a mortgage sooner. Generally, if the circumstances were out of your control and not simply a result of poor financial planning and reckless spending, you are more likely to get a VA loan despite your Chapter 7 status. The same rules for Chapter 7 will apply in cases of foreclosure.
It is important to note, though, that those who have filed Chapter 13 bankruptcy, which is when there is still some repayment in place at a lower rate, can apply for VA home loans sooner than those with Chapter 7. The only caveat of getting a VA home loan with Chapter 13 on your record is that you must prove at least 12 months of current repayment on the loans that remain post-bankruptcy.
Taking Steps to Improve Your Score
One of the best ways to ensure that you can get the VA home loan that you want is to take concentrated steps towards improving your current credit score. This way, lenders will see that you have reformed your ways and are ready to take on the responsibility of owning a home. This process begins after completing the bankruptcy paperwork and going through court. At this point it is important to make sure that the three major credit bureaus TransUnion, Equifax, and Experian have your bankruptcy on their record and have taken off your old debts.
After this is complete, you should take out at least two new secured credit card accounts to help build up your financial record post-bankruptcy. Secured credit cards are given to you after you deposit the credit amount (0 is a good figure) with the company. You then make purchases with the cards and repay them each month. To help build credit, only make purchases up to 50% of the credit (0) and repay the total balance each month. Your credit will improve rapidly with this method.
Getting a Secured Card
The good news is that secured credit cards are widely available online through private lenders. Doing a simple web search for the terms secured credit cards will give you literally dozens of lenders to choose from who can help you today. After bankruptcy, getting the VA home loan that you need can be tough, but building your credit over time through a secured credit card can help speed up that process.