Skip to content

Why Credit Monitoring is smart when you are looking for a VA loan

Are you planning on buying or refurbishing your home on substantially better terms than any mortgage loan offers? A VA loan could just be your silver lining if you are a U.S service member, veteran, or spouse to one.

A VA loan has many benefits like minimum credit score requirement, no mortgage insurance, competitive terms, 100 % financing, and no down payment. As a result, many people overlook their credit scores when applying for a loan.

How Does Credit Monitoring Work?

Credit monitoring is a service that monitors your credit reports and prevents identity theft for borrowers. Lenders and banks use credit monitoring to gauge if you are loan-worthy or have a tendency to default.

This service also prevents thieves from stealing your information and using it to make fake inquiries ranging from retail purchases to insurance claims. Every time irregular behavior is noticed on your credit, you get a notification.

Monitoring has gone a long way to minimize credit-related theft, checking a borrower’s financial behavior, and reducing loan defaults. It also helps in credit management, which is essential for every VA loan application.

VA requirements are:

  • No down payment unless lender dictates so
  • VA can assist borrowers in preventing defaults
  • Private mortgage is not a must
  • No prepayment penalty if the loan is paid before the due date
  • Lenders can determine if the borrower is a satisfactory risk for a loan

Portrait of a pretty young woman dressed in sweater holding credit card at her face

Importance of Credit Monitoring for VA loans

Even though VA loans do not have a minimum credit score limit, most lenders do. For this reason, you should review your credit report frequently. Credit monitoring services will keep you updated on your credit reports 24/7, which is vital when applying for a loan.

Here are five reasons why credit monitoring is a wise choice.

1.  Prevent Identity Theft

In 2016, there were over 399,225 reported cases of identity and credit card fraud. And if you are not careful, it could be you!

Lenders will always be keen on your creditworthiness and your continuous borrower’s behavior. Therefore, if you fall victim to identity theft when applying for a VA loan, your application will be denied.

Credit monitoring services detect identity theft as soon as it occurs and notify you before your credit is ruined.

2.  Track Credit Score Changes

Checking your credit report once a year is not enough as so much could affect your credit monthly, weekly, or even daily. If you are applying for a VA loan, a slight change in your credit report can affect your interest rates and eligibility.

Credit monitoring services will alert you whenever your credit score goes up to start your loan application process. It is the best time to use a VA loan to refinance your mortgage or finance your new home purchase.

You will also receive notifications if you have late or missed payments or if you are reported to the credit bureau.

3.  Financial Planning

Credit inaccuracies and poor financial planning result in low credit scores. Regular credit monitoring will keep you up-to-date on how your economic activities are impacting your credit score. Consequently, you will know which economic patterns are damaging or building your credit.

In addition to this, you will monitor your credit score, thus identifying and fixing errors before credit bureaus and lenders notice. Otherwise, you will risk increased rates as well as losing thousands of dollars.

4.  Delinquencies and Defaults

It is so easy to fall behind your loan payments if you do not track your credit. The high chances are that you may have a history of defaulting loans without being aware.

If a vigorous VA loan lender senses a possibility of defaulting, you will get extremely high rates or become unqualified. The lower the element of risk, the easier your VA application will be.

5.  Inquiries on Your Credit Report

Monitoring your credit will keep you updated if any lender or credit bureau looks into your credit history, which is common when applying for a VA loan. You get a notification anytime a company requests a copy of your credit history with credit monitoring services.

Furthermore, if someone tries checking your credit report illegally, you will get a warning notice. You will have a list of whoever tries to acquire a copy of your credit history regardless of the purpose.

Key Takeaways

Since 1944, VA loans have been every military service person’s refuge in financing home purchases. The loans have lenient credit requirements, so many people ignore their credit score and management when applying—this unawareness results in high-interest rates for those with low credit.

Credit monitoring ensures your credit history and report are remarkable enough to impress any lender. On top of this, you stay clear of identity theft and credit imprecisions. Without these services, your credit is exposed and risks suffering damage.

Find The Right Mortgage

For more than 20 years, Phil have been helping customers achieve their home purchase and refinance goals by providing them with invaluable resources and support.

Schedule a FREE Consultation
Phil Ganz

Subscribe to Get Your First Time Homebuyer Checklist

Sign up for the weekly newsletter to stay up to date on the latest real estate market trends, loan news, and so much more!