What Credit Score Is Needed for a USAA VA Loan?

Buying a home is an exciting milestone in life. However, the process of getting approved for a mortgage can be daunting, especially when it comes to your credit score. This is particularly true for VA loans offered by lenders like USAA. So what credit score is needed to qualify for a USAA VA loan? Let’s break it down.

VA loans are mortgage loans guaranteed by the Department of Veterans Affairs (VA) and offered by private lenders. They provide significant advantages for eligible borrowers, including:

• No down payment required
• No private mortgage insurance (PMI)
• Flexible credit standards
• Closing cost assistance
• Ability to refinance at lower rates

USAA is one of the top national lenders that offers VA loans They provide a range of financial products specifically for military members, veterans, and their families

While the VA itself does not have a minimum credit score requirement, lenders like USAA do set their own standards. So your creditworthiness plays an important role in qualifying for a USAA VA loan

The Importance of Your Credit Score

In simple terms, your credit score indicates to lenders how reliably you have paid debts in the past The higher your score, the less risky you generally appear

Key factors that influence your credit score include:

• Payment history – Have you made past credit payments on time? Late payments can lower your score.
• Credit utilization – What percentage of your available credit are you using? High utilization can hurt your score.
• Credit history length – In general, a longer credit history reflects better.
• New credit inquiries – Too many new credit applications in a short timeframe can lower your score.

The most commonly used credit scoring models range between 300 and 850. So where does your credit score need to be to qualify for a USAA VA loan?

USAA’s Minimum Credit Score Requirement

While the VA itself does not mandate a minimum score, USAA does have a credit policy for VA loans. According to USAA, the minimum credit score to qualify for a USAA VA purchase or refinance loan is 620.

This 620 minimum applies to applicants who wish to qualify based on their credit score alone. However, USAA notes that they will consider other compensating factors for borrowers with scores below 620.

These compensating factors can include things like a strong down payment, significant cash reserves, a low debt-to-income ratio, or a clean payment history.

So in reality, it is possible to get a USAA VA loan with a credit score under 620, but your chances improve significantly once you reach that threshold.

How USAA’s Minimum Score Compares to Other Top Lenders

USAA’s published minimum credit score requirement for VA loans is in line with several other top national lenders, including:

• Navy Federal Credit Union: 620 minimum
• Veterans United: 620 minimum
• DHI Mortgage: 620 minimum

However, some lenders do go lower. For example:

• Rocket Mortgage accepts VA applicants with credit scores as low as 580
• Caliber Home Loans has an advertised minimum VA credit score of 580

So while a 620 credit score is USAA’s published cutoff, other lenders may be an option if your score falls below that.

That said, it’s always wise to aim for the highest credit score possible, since that unlocks better mortgage rates and terms.

What Is Considered a “Good” Credit Score?

Credit scoring models like FICO® categorize scores into different creditworthiness tiers. Here is how these tiers generally break down:

• Exceptional – Scores above 800
• Very Good – Scores between 740 – 799
• Good – Scores between 670 – 739
• Fair – Scores between 580 – 669
• Poor – Scores 579 and below

So while a credit score of 620 meets USAA’s minimum requirement, it falls into the “fair” credit tier. Raising your score into the “good” or above categories (670 and up) puts you in a better position for the lowest rates.

How Can I Check My Credit Score?

Since your credit score plays a key role in qualifying for a VA loan, it’s important to check your score well in advance of applying.

There are several ways to check your credit score for free, including:

• Order your free annual credit reports from www.annualcreditreport.com. These reports won’t include scores, but allow you to review your credit history.

• Check your FICO® Score for free on USAA’s website if you’re a member.

• Review credit cards or financial accounts that provide free scores. Many will show a VantageScore though, not your FICO®.

• Use free score estimation tools from Credit Karma or others. These also show VantageScores.

For the most accurate picture, purchase your FICO® Scores directly from www.myfico.com or USAA’s member site. Checking well in advance gives you time to improve your credit standing if needed.

Tips for Improving Your Credit Score

If your credit score falls below USAA’s minimum VA requirement or you simply want to qualify for better terms, here are some tips to improve it:

• Pay all bills on time. Payment history is the biggest factor in your score. Set up autopay if it helps.

• Lower credit utilization. Keep balances low and avoid maxing out cards.

• Don’t apply for new credit right before applying for a mortgage. New inquiries and accounts can lower scores temporarily.

• Correct any errors on credit reports by disputing them with the bureaus. Mistakes can unjustly hurt your score.

• Consider adding positive information, like becoming an authorized user on a spouse or partner’s old credit card account.

With diligence and patience, you can improve your credit score over time. This opens the door not just to a USAA VA loan, but better rates in the future.

Next Steps to Take

• Check your credit score and reports to understand where you stand currently. Annualcreditreport.com provides your free annual reports from Experian, Equifax, and Transunion. For free scores, try options from USAA or other financial accounts you have.

• Research different VA lenders and their credit policies if your score falls below USAA’s minimum requirement. Some may offer more flexibility.

• Make a plan to improve your credit. Paying bills on time, lowering utilization, and correcting errors can all help raise your score over months and years. Be patient as change takes time.

• Connect with USAA or another VA lender when you feel ready. They can pre-approve you and explain all the loans, rates, and terms you qualify for based on your credit score and profile.

While a 620 FICO® score meets USAA’s minimum for VA loans, aim higher if you can. The higher your credit score, the better your interest rate and overall loan terms will be. With diligence and smart financial habits, you can position yourself for VA loan success.

Yes, it’s possible to get a VA loan with a 600 credit score, but the VA doesn’t require a minimum credit score. Lenders, however, typically have their own requirements, and many prefer a score of 620 or higher.