USDA Loan Credit Eligibility is more flexible than most other loan programs.

Credit Eligibility and USDA LoansUSDA Rural Loans or a USDA Loan is a great loan program funded by the government to help infill some rural areas in each state. While the properties that are considered USDA eligible will vary, and there is no exact formula to determine a property’s eligibility–what does remain is the less stringent qualification guidelines for those looking for a USDA loan.

At Banner Mortgage, if you are a borrower applying for the USDA Loan program, a mid-score of 640 is accepted by our underwriters and will not require an exception. Each lender and their underwriters determine what they find acceptable so if you are not working with Banner Mortgage, the mid-score rule of 640 may not carry over with your lender.

What is calculated into a credit score?

Details such as:

  • On time payments
  • Late payments and late those late payments are
  • How many revolving credit accounts are open
  • The proportion of balances to credit limits on revolving accounts
  • If your history includes any: collections, bankruptcies, judgements and/or liens
  • How new accounts are

Your credit score is a “snapshot” at a specific moment in time. Your scores can change with new actions and with the passage of time. For example, the farther in the past derogatory information occurs, the less impact it has on the credit score.

What if my mid-credit score is below 640? 

If your mid-credit score is below 640 don’t panic! In most cases, we are able to help our borrowers raise their credit scores following our counseling. This is not guaranteed for anyone, and you must work with an experienced Credit Counselor in order to ensure you will be able to rapidly improve your credit score for loan qualification purposes.

How can I improve my credit quickly?

There are some basic steps that anyone can take to improve their credit quickly:

  • Make your monthly payments on time.
  • Keep balances on revolving accounts low.
  • Don’t apply for new credit unless it is absolutely necessary.

In addition to these steps, we work with a company who specializes in credit counseling. Working with a company like this makes it much easier to remove inaccurate or incorrect information from your credit report that is negatively impacting your score. We work to quickly improve your credit using a program from Advantage Credit called Rescore Express. Companies like this are not able to serve the public directly and all work must be done through your Mortgage Loan Officer.

What is Rescore Express?

According to the Advantage Credit website, ReScore Express is:

Rescore Express is Advantage Credit of Colorado’s rapid rescore program. It will correct incorrect information at the bureau level. With the proper documentation, the correct information will be sent to the bureaus. The bureaus will verify the document and update the account. The update will take about 3 business days after being submitted to the bureaus. (vs. the 2-3 months it usually takes) if the borrower disputes the information themselves.

Do you have more questions about your credit score, improving it, and disputing anything you see on it? A great resource can be found here. This will give you answers to questions such as:

  • How to contact the credit bureaus
  • How to freeze and unfreeze your credit
  • Information on a secured credit card
  • Additional links for other consumer resources

Overall, your credit score is a qualifying factor in any home loan program but its value is not required to be as high with the USDA loan program. At Banner Mortgage, we take the time to do a complete credit analysis with each borrower. If we find simple fixes such as paying down debt, or even the need for an additional revolving credit account we will advise you of such–then run a rapid rescore. Often times, there are simple changes a borrower can make to quickly improve their credit score without having to go through the hassle of contacting the credit bureaus.

You may also like:

How do USDA Loans work?

Top 8 Benefits of USDA Rural Loans

Have more questions on the USDA loan or on improving your credit score? Fill out the form below!

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