Can I Get an IRRRL Even When I Have Bad Credit?

Bad Credit

The Veterans Affairs’ Interest Rate Reduction Refinance Loan (IRRRL) remains the preferred refi choice among VA borrowers because of its lenient qualifications and guidelines.

Compared to traditional VA refinancing, it is easier to reduce one’s interest and mortgage payments with the IRRRL program.

Thanks to its NO appraisal, NO asset verification, and NO credit score check rule, borrowers can easily refinance without going through the usual hassles of conventional refinancing.


Find a loan that fits your financing needs.

A great advantage

The waiving of the credit score check is one of the greatest perks for many borrowers, especially those who don’t want to wait for months or years just for their bad record to pass the required “flawless period”.

But this rule isn’t strictly followed to the book.

There are instances where your lender could still pull your credit for underwriting to evaluate whether or not you are worthy of an approval.

So what are these exemptions?

a) If your current mortgage payment is past its due by 30 days or more. Under the IRRRL refinancing rules, you should be current on your mortgage payments for the past 24 months (2 years).

b) If the total monthly payment – inclusive of the principal, interest, taxes, and insurance – results to an increase of more than 20 percent of the pre-refinance amount.

Underwriting rules can vary from lender to lender.

Others may still impose a credit score limit, while others may still choose to pull your credit whether or not you have issues with your payment record.

What if I have bad credit?

Having a less-than-stellar credit score does not automatically disqualify you from a VA IRRRL.

Your credit is only one of the deciding factors that ultimately determine an approval. Other positive elements in your financial documents can compensate for this problem and revive your creditworthiness to the lender.

There are a few things however that can help you mend your negative standing caused by a bad credit, or if you want to improve your chances of approval, some strategic preparation tips even before you apply:

  • Check your record for any errors. Mistakes in your record can cause a disastrous change in your score. By checking your credit score, you can scan for any errors beforehand and report them to the creditor for contesting. Notify the credit agencies of your concern as well.
  • Pay your bills on time.
  • Pay off your credit card balances in full every month and don’t spend beyond your credit limits.

All credit programs, no matter the magnitude and scope, always look to your credit scores to determine your creditworthiness.

So whether you are getting a personal loan or an IRRRL, it matters that you are well aware of your credit health.

Practice responsible credit habits and take away the anxiety of having a bad score every time you need to get a loan.


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