From the desk of company president and founder Jeffery Vance:
Our job here at Ohio VA Loans is to help you by coaching you on what you need to do to qualify for a VA Home Loan. The VA is required to prove that you are on your feet financially before they can allow you to use your housing benefit. They don’t want to do something that will hurt you and your family by putting you into a financial bind.
Your credit report is showing past due accounts and/or collections that need addressed prior to applying to the VA Housing Program. You must prove that you have your finances in order to get approved. Here at Ohio Home Finance, we use five methods to improve or work around low credit scores; disputing incorrect credit bureau accounts, resolving state tax liens, proving good payment history, establishing alternate credit, and paying past-due collections. Below you will find some quick suggestions to help you get started.
Disputing Incorrect Accounts
The three bureaus that dictate your credit scores are required by law to maintain a website where consumers can pull a free credit report once a year, and from there dispute any incorrect items.
Before you log in to the site, make sure you have sufficient time to complete your work, as logging in a second time will cost you $11.50.
The web address is HTTP://www.annualcreditreport.com/ .
In order to save you money and to better allow you to get a loan, make sure that if your credit score is below 620, go to each credit website, pull their credit and dispute any incorrect account. Directions on how to do this is provided at each site. You must dispute the same account on each web site otherwise the account will show back up on all three. Then wait for 2-3 weeks, and call us to re-pull credit.
For more information on removing a disputed item from a credit report, click here.
Resolving State Tax Liens
A tax lien is filed with the county courts when a tax liability is referred for collection. The Department of Taxation does not forward information to, nor receive information from the credit bureau. However, when an assessment is forwarded to the Attorney General’s Office for collection, a judgment lien is filed with the county clerk of courts. This information is public record.
Any information that is public record can be obtained by various credit bureaus, banks, or financial institutions. It is, therefore, possible that the lien could affect any credit ratings provided by or given to these agencies. To obtain more information about the lien, contact the Attorney General’s Office. The numbers for Ohio State Taxes are call 1-888-246-0488 for business taxes, and 1-888-301-8885 for individual taxes.
Proving 6-12 Months of On Time Payments
It is important that you have a good twelve month rent or mortgage payment when applying for a mortgage loan. The underwriters are going to judge how well you will pay them by how well you have paid others in the past. If you are renting from a property management company we will be able in most cases to send a verification to them to fill out. If you are renting from a friend or individual you will have to prove by cancelled checks that you paid them on time. Written receipts will no longer suffice.
As they are guaranteeing your loan against default, kind of like a cosigner, they also want to make sure you can and will make your payments. They will look at how well you have been paying your bills in the past six to twelve months. We have to prove to the VA Underwriters that you are on your feet financially.
If you have a lot of open collections and judgments on your credit, you can still get a loan, but you have to prove you have been paying all on all of these accounts for the last six to twelve months at least. We often recommend a Consumer Credit Counseling Program. We favor the original program that was started by the United Way, found here. Pay into this for six months and give us a call for a check-up. The main office number for Consumer Credit Counseling office in Ohio is 1-877-287-2227. They will be able to get you the phone number of the office nearest to you. They are all over the country.
Establishing Alternate Credit
Alternate Credit is any credit or bills you pay monthly that do not appear on your credit report. The VA usually looks for at least twelve months of payments no more than thirty days past due. This can really help you as you don’t need traditional credit. Make sure you have your name on your utilities. We can also use payment letters from insurance companies, rent to own companies, car dealers etc. Have the companies draw up a twelve month payment history of your account on their letterhead signed by them stating: “In the past twelve months the average payment was ____ and was not more than 30 days past due.” Get as many of these letters as you can, as they are essential if you are establishing alternate credit.
Paying Collections Off By/Before Closing
If you haven’t been paying on your collections for the last six months, you can often still get a VA loan by paying off your past due accounts by closing. The VA will sometimes allow your seller to pay off these accounts for you at closing, by making an offer on a house contingent on the seller paying the veterans closing cost, prepaids and other accounts. For more information, give us a call at 800-784-7731.