How To Increase Your Credit Score To Buy a House

Your FICO score directly affects whether you get approved for a VA home loan and what interest rate you pay. The good news: You don’t need pristine credit to get a VA home loan.

In fact, VA loans have the most flexible credit requirements of any major mortgage program, and veterans with less-than-perfect credit qualify every day.

This guide covers the VA’s credit score requirements, explains exactly what goes into calculating your score, and provides you with a specific, actionable game plan to improve your credit score before you apply.

The VA itself sets no minimum credit score for its home loan guarantee program. Instead, individual lenders set their own minimums, based on their own lending criteria.

In practice, however, most VA-approved lenders require a minimum FICO score of 580 to 620.

Borrowers above 620 will find the widest selection of lenders and better rates. However, some lenders specialize in lower-score VA loans and will even go below 580 if other factors — stable income, low debt-to-income ratio — are strong.

The VA does not set a minimum credit score; lenders do. That means it’s a good idea to shop around multiple lenders. Especially if your score is below 620.

Credit Score Requirements by Loan Type

Even though the VA doesn’t set a minimum score for its home loans, the lenders it works with do. The higher your score, the better, and most VA loans are approved for borrowers with scores above 620. If you fall below that and meet other requirements, it is very possible to get approved even if you have a VA loan credit score between 580 and 620. Lenders may even go lower if you have a strong source of income and little debt.

Here’s a quick comparison of the scores required for common home loans for service members and Veterans.

As you can see, the VA loan is the most flexible of the three, allowing the lowest FICO scores and no additional down payment. With a respectable service record, steady income, and a workable debt-to-income ratio, you’re in good standing for a VA loan.

When it comes to loan terms, it’s easiest to understand them from the lender’s point of view. When a lender considers giving you a home loan, they are doing so with the idea that over the course of the loan, they will make money by charging you interest. If they knew you would pay them no matter what, they wouldn’t be too concerned about a default and would see giving you the money as little to no risk.

The reality is that life happens, and experience has shown lenders that sometimes they lose on their investments. People get into financial trouble, declare bankruptcy, or fall on hard times. To make sure the lender feels comfortable loaning someone money, they require people they consider risky to pay higher interest, carry insurance called PMI, or put down a larger down payment on the property.

With a VA loan, the lender is told that no matter what, the federal government will cover their loss up to an agreed-upon amount. That means less risk for the lender and, in turn, better loan terms for you. For service members and Veterans seeking VA loans, that usually means a higher approval rate and lower interest rates.

For example, let’s say two people apply for a home loan with the bank. One is a Veteran with a credit score of 740, and the other is a Veteran with a score of 620. Because they both apply for a VA loan, neither will need a down payment or PMI. The Veteran with a 740 score might get a loan rate of 5.5%, while the Veteran with a 620 score will have a rate of 6.25%.

The bottom line is that every point counts. Even improving your credit by 20 or 40 points can save you tons of money over the course of a 30-year mortgage and lead to a much better chance of getting approved.

Credit scores are very important, but thankfully, they don’t take much time or effort to improve. That’s great news for anyone looking to buy a house with average or even poor credit. Whether you are a few months or a few years away from buying a house, a proactive approach to improving your credit is a great use of your time. Here are a few tips on how to improve your credit score to buy a house.

• Tip 1: Pay bills on time. It may seem obvious, but how often do we forget to pay a bill? Those missed or late payments can all lower your score. Set calendar reminders or work out another system to ensure bills are paid on time.

• Tip 2: Reduce credit card balances. It’s easy to get used to paying only the minimum on credit cards, but carrying a balance doesn’t help your credit score. Your goal should be to use no more than 30% of your available credit. For example, if you have a credit card with a $3,000 limit, try to keep your balance below $900.

• Tip 3: Avoid new inquiries. Every time you apply for a new loan or credit card, the credit bureaus track it. If they see you frequently do this, they will give you a lower score. Stop applying for additional credit, and your score will increase.

• Tip 4: Keep older accounts open. You may think it’s a good idea to close an old account you no longer use, but that is not the case. For example, let’s say you have a credit card with a $2,000 limit, no balance, and you haven’t used it in a year. Keeping that card open will help your score. If you close the card, your score can go down.

• Tip 5: Fix errors. You can get a free copy of your credit report once a year. Pull your free report and check it for errors. You’d be surprised how many people have lower scores because of inaccurate information on their credit reports.

Just following these simple tips can quickly raise your score. You won’t see a jump from 580 to 750 in a month, but you will see steady increases as you continue to follow our recommendations.

VA Loans After Bankruptcy or Foreclosure

A bankruptcy or foreclosure does not permanently disqualify you from a VA loan. The VA sets specific waiting periods before you can apply:

• Chapter 7 bankruptcy: Two-year waiting period from discharge date.
• Chapter 13 bankruptcy: Eligible after 12 months of on-time plan payments, with court and trustee approval.
• Foreclosure: Two-year waiting period. VA loan foreclosures may affect your remaining entitlement.

Use the waiting period to rebuild your credit systematically. A secured credit card, on-time payment history, and reduced debt can restore a workable score within 18–24 months. See VA’s guidance on loan eligibility for current program details.

Even if you don’t have years or months to improve your score, 30 days is enough to make a positive impact in preparation for applying for a VA home loan. With limited time on your hands before applying for a home loan, here is our list of short-term tactics to make a measurable impact on your score.

• Tip 1: Pay down revolving credit. If you only have $50 left to charge on a card, you pay $50 on it each month, and then use the $50 again, this is known as revolving credit. Pay $200 to $500 on one of these cards and do not use it.

• Tip 2: Ask for an increase in the credit line. Increasing your credit limit can change your usage ratio. I once had a card with a $1,000 limit that was almost fully used. When I asked for an increase, the bank raised my limit to $10,000. This turned almost 100% utilization into only 10%.

• Tip 3: Remove small collection accounts. You may have forgotten about that water bill you didn’t pay before your move, but the credit bureau did not. A small bill may be adding months or years of delinquency to your report. Paying the small collection account off is a good move for short-term credit score improvement.

• Tip 4: Request goodwill adjustments. You may have a few late payments on a card, but maybe you have been a customer for many years. If you call the issuer of the debt, they may drop one of the late payments.

• Tip 5: Monitor your progress each day. There are plenty of free apps and services that let you check your score without hurting you. Take advantage of these and track your progress.

Quick wins like paying down a balance or correcting an error can move your score in 30 to 45 days, while bigger rebuilds like recovering from a bankruptcy or aging your accounts can take 12 to 24 months, so starting early is always the right call.

Improving your credit is important, but remember, it is only part of getting approved for a VA home loan. As your credit improves, follow these steps to ensure you are ready to achieve your piece of the American Dream.

• Step 1: Request your Certificate of Eligibility (COE). The COE is your ticket to a VA loan. This document states that you, as a service member or Veteran, meet the VA’s eligibility requirements to apply for a VA-backed home loan. You can get this document online in seconds on the VA’s website.

• Step 2: Compare lenders. The VA guarantees home loans, but it does not issue them. With a COE in hand, it’s your job to search various lenders and see who will give you the best terms on your loan. Shop around, especially if you have a good credit score, high income, and a minimal amount of debt.

• Step 3: Gather your financial documentation. Lenders will ask for: LES or recent pay stubs, DD-214 (for veterans), W-2s for the past two years, federal tax returns, and two to three months of bank statements.

• Step 4: Get preapproval first. Preapproval tells you your actual purchase range and signals to sellers that you are a serious buyer. It also locks in your rate for a period while you search.

• Step 5: Never stop working on your credit score. The time between preapproval and closing can be 30–60 days. Keep your credit utilization low, make every payment on time, and do not open any new accounts during this period.

It’s great news for service members and Veterans that you don’t need a perfect credit score to get a VA home loan. Even poor scores have a decent chance of approval. However, it’s never a bad idea to improve your credit score. By following our tips to improve your score, you can make a real difference in your loan approval chances and the terms of your loan. A little effort goes a long way when improving your score.

When you’re ready, gather the necessary documents and reach out to approved lenders. With a preapproval in hand, you can begin your search using trusted platforms like AHRN to find verified, military-friendly listings near your duty station. Happy hunting!