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HOW DO VA LOANS FOR BAD CREDIT SCORES COMPARE TO OTHERS
VA loans for bad credit scores offer relaxed credit requirements for its applicants. In most situations the minimum scores are often lower than those of normal loans. In this case borrowers of the loans do not need to have in their possession credit scores that are without blemish or elite credit scores. The main aim of the loans is often to secure financing for as many military buyers or veterans as possible. In cases where the credit scores are too low they can be improved in order for the borrower to qualify for a loan even if it would not have reached the desired score required for normal mortgage loans given by most financing institutions.
When compared to other loan options VA loans for bad credit scores offer a benchmark that is more accommodating. Such loan options include conventional loans. The conventional loans are often not backed by the government. This means that the lenders do not get a guarantee from the government for the loans. It thus makes this hard for lenders to offers such loans to people with bad credit as they do not have assurance of getting their money back.
Other loans that differ from the VA loans for bad credit scores are the FHA loans. Such loans are also backed by the government as VA loans are but may require a down payment of a certain percent for one to get it. Their credit score minimum may be in the same ranges that of VA loans since it is at about a minimum of 620. The down payment however makes it a less good option since VA loans have no provisions that require the borrower to make a down payment of a certain percentage of the purchase. They may also require an upfront mortgage insurance premium plus mortgage insurance paid monthly.
In addition to the above the USDA also differ from the VA loans for bad credit. This option is also government backed thus lenders are more flexible with the credit scores that need to be obtained by their borrowers. However they are only given to people based in the rural areas. They do not put emphasis on the minimum credit scores but the average score most borrowers seem to attain is that of around 660. With a score below this you may need additional paper work and other requirements that you need to meet.