VA Credit and Readiness Plan: How Lenders Read Your File

What VA lenders look at

• Your last 12 months. Recent on-time payments matter more than old problems.
• Thin credit. A short credit history is not automatically a negative. Documented rent, utility, phone and insurance payments can sometimes count.
• Residual income. The money left each month after your housing payment, debts, taxes and basic living costs. It is based on your region and the size of your household.
• Debt compared with income. Your monthly debts measured against what you earn.

Who this plan fits

Veterans and service members who have had credit trouble, who have very little credit history, or who heard a no from another lender and want to know what to work on. If you are just learning how the benefit works, start with the VA home loan starter.

What to gather

• Your free credit reports from AnnualCreditReport.com
• Your DD-214 or statement of service, so your COE can be requested
• Twelve months of rent proof: a landlord ledger or bank statements
• Paperwork for any bankruptcy, foreclosure or collection, with dates
• A short, honest written explanation of what happened and what is different now

A 90-day plan

• Now. Pull your free reports and request your COE.
• Days 1 to 30. Put every account on autopay. Pay credit cards down. Start collecting 12 months of rent proof.
• Days 31 to 60. Bring anything past due current. Write explanation letters for older issues.
• Days 61 to 90. Pull your reports again, compare, and bring the results to a call.

The plan gives you practical steps. It cannot promise a score change or a lending decision.

Common snags

• Past bankruptcy or foreclosure. VA guidelines generally look for about two years after a Chapter 7 bankruptcy or a foreclosure, sometimes less when credit has been rebuilt and the cause was outside your control. A Chapter 13 plan may be considered after at least 12 months of satisfactory payments, with bankruptcy court approval and subject to lender requirements.
• Paying an old collection first. The order matters. Ask before you pay one.
• New accounts. Opening cards or financing a car while you prepare can undo the progress.
• Closing old cards. Older accounts in good standing usually help. Keep them open.

Your next step

Pull your reports and bring them, along with your rent history, to a first call. You will hear what can be reviewed now, what needs documentation, and what to work on first.

When you want to talk it through, book a short phone call with Zak on Chris Lamm’s team at MortgageOne. No credit check is needed for a first call, and you can bring as many questions as you like.