Can You Still Qualify For The USDA Streamline Assist Program With Bad Credit?

Posted on

Homeowners who financed their homes through the USDA can now quickly and easily refinance their loans using the USDA streamline assist program. This program provides quite a few benefits including the fact that it doesn't require homeowners to have good credit to qualify since the agency doesn't pull credit reports. While the agency doesn't care about a homeowner's credit score, it may still come into play during the application process. Here's what you need to know.

The Mortgage Company May Have Minimum Score Requirements

Although the refinance program is provided through the USDA, the actually financing is done by banks. Like with other government mortgage programs, the bank may have qualification requisites that go above and beyond the ones required by the USDA. Thus, it's possible the bank who is looking over your application may have a minimum credit score for approval and will decline to refinance your mortgage if your score isn't good enough.

The good news is there's typically multiple banks available who do USDA-backed loans, so you can shop around for a lender that doesn't care about your credit score. While large banks may be the biggest lenders, don't forget to check with smaller banks, credit unions, and online mortgage companies to see how they can help.

The Report May Be Pulled for Payment Verification

Another issue you may run into is that the lender still pulls your credit report to verify you have been making on-time payments on your USDA loan for the minimum time required by the agency. To qualify for a streamline assist loan, you must have made the previous 12 payments on your mortgage on time. If you were late even one time, your application will be rejected.

Thus, the lender may still pull your credit report to determine if you've had any late payments on your mortgage. In this case, it typically won't be used to determine your credit worthiness, just your eligibility for the program. If you're still uncomfortable with the bank getting your credit report, ask if there are other ways you can provide verification that you made your payments as agreed.

For instance, you may be able to provide copies of canceled checks or your bank statements showing when the payments were made. Your current lender may also be able to provide a printout showing your payment history on the account that you can then provide to the new lender.

To learn more about the USDA streamline assist program or help refinancing your home, contact a mortgage lender who is versed in this area or contact a company like Carrington Wholesale.