The final part of our Illinois VA Loans series will explain different credit issues that may be discussed and questioned during the application process.

Lack of Credit
It is possible for a veteran that has never borrowed money to obtain a VA mortgage.  If the veteran can show consistent and prompt monthly payments on items like utilities, rent, car insurance, and other similar items then a credit file can be built for the veteran to show their responsible nature.

Chapter 13 Bankruptcy
If the Chapter 13 trustee approves of the loan, then it is possible for a veteran currently enrolled in a Chapter 13 plan to qualify for a mortgage.  The veteran must present proof that all payments to the court have been made on time for at least the past 12 months.  The veteran will also need to demonstrate a strong work history and overall strong financial stability.

Chapter 7 Bankruptcy
The VA requires that a Chapter 7 has to be discharged for at least 2 years before a veteran can apply for a VA mortgage.  The veteran will need to have re-established credit and a solid work history.

Collections and Judgments
Any collection that is minor in nature and amount will usually be ignored.  However, any judgment must be paid in full prior to the closing of the loan.

Consumer Credit Repayment Plans
The guidelines for the people involved in a Credit Counseling plan are very similar to the bankruptcy guidelines. The veteran must demonstrate a solid history of repaying the debt for at least 12 consecutive months in order to prove their willingness to handle their finances responsibly.

For additional information, visit our Illinois VA mortgage page of our website. If you have questions or want to see if you qualify, contact me below or apply online!