VA Mortgage Loan Rules: Your Credit Report

When you apply for a VA mortgage loan, your lender will require your permission to obtain financial data about including your credit report. Did you know your lender may also require tax documents, information on open lines of credit and other accounts?

In an era where borrowers are rightfully concerned about giving out data protected by the Privacy Act including Social Security Numbers and other sensitive information, some VA loan applicants may wonder if a lender is justified or even legally allowed to request such information.

The VA Loan rulebook, known as the VA Lender’s Handbook, instructs the lender how to proceed with the request for and use of this information.

For example, a borrower may be required to furnish written permission to the lender to obtain credit reports and other sensitive information. But a lender should not require the borrower to sign blank pages or incomplete documents.

VA loan rules govern how such sensitive data may be transmitted to the lender. While electronic transmission of VA loan information is permitted, the lender may never receive a borrower’s credit report from any source except the credit reporting agency itself. Third parties may not transmit this information or mail this information to the financial institution where you choose to apply for your loan.

There are also rules about the age and nature of your credit report. Chapter Seven of the VA Lender’s Handbook states:

“Credit reports used in analyzing VA loans must be either:

• Three-file Merged Credit Reports (MCR), or
• Residential Mortgage Credit Reports (RMCR).

The credit report must be less than 120 days old (180 days for new construction). For automatically closed loans, the date of the credit report must be within 120 days of the date the note is signed (180 days for new construction). For prior approval loans, the date of the credit report must be within 120 days of the date the application is received by VA (180 days for new construction).”

Your credit report must be, “prepared by a reputable credit reporting agency” and each account that has a balance “must have been checked with the creditor within 90 days of the date of the credit report”

For more information on any of these issues, speak with a participating VA loan officer.

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