Credit scores for VA and USDA loans: who actually sets the minimum

VA’s underwriting regulation, the one lenders are actually held to, runs for pages without using the words “credit score.” USDA’s handbook does use them, but it hands most of the decision to an automated system. That’s why a quick search turns up several different “minimums” for each program. Most are lender rules or old guidance, repeated until they sound official.

That has two practical consequences. A lender that turns you down may be applying its own rule rather than VA’s or USDA’s. And both programs often look harder at your last year of payments than at the three-digit number.

The short version, side by side

For comparison, FHA writes its minimums into its handbook (see credit score for an FHA loan), and conventional loans follow Fannie Mae and Freddie Mac rules (see credit score for a conventional loan).

What VA actually checks instead of a score

VA’s regulation says the lender’s conclusion about your credit must rest on “a careful analysis of the available credit data.” A few lines in it carry most of the weight:

• Recent history counts most. Credit is generally considered reestablished after 12 months of satisfactory payments following the last derogatory item. So a late payment two years ago with a clean year since reads differently than one last month.
• Late debts count even after you pay them. When debts weren’t paid on time, the regulation treats the payment record as unsatisfactory, and catching up only after you apply for credit doesn’t erase that. A lender that approves you despite derogatory items has to write down why.
• Bankruptcy timing. If a bankruptcy was discharged within the past 12 months, VA says it “will not generally be possible” to find you a satisfactory risk. Between one and two years out, approval generally needs both re-established credit with good payments and a bankruptcy caused by circumstances beyond your control. Our page on mortgage waiting periods covers the other programs.
• Poor credit can sink a file by itself. “A poor credit history alone is a basis for disapproving a loan.”

Then the income side. VA uses two tests together: a debt-to-income ratio, with 41% as the line, and residual income, meaning what’s left each month after the house payment, debts and other major expenses. Missing one standard “will not automatically disqualify” you, and VA says “no single factor is a final determinant.” Above 41%, the underwriter’s supervisor has to sign off with a written justification, unless your residual income beats VA’s guideline by at least 20%.

Example: with $6,000 a month in gross income, a 41% ratio allows $6,000 x 0.41 = $2,460 in total monthly debt payments, including the new house payment. At $2,700 a month (45%), the file can still be approved, but it needs that second-level sign-off or residual income at least 20% above the guideline.

VA’s purchase loan page says you have to meet both VA’s and your lender’s standards for credit. The score minimum lives on the lender’s side. One lender may stop at 620 while another reviews lower scores case by case, so if you have VA eligibility and a lender says your score is too low, ask whether that’s their policy. It usually is.

How USDA uses your score

USDA Rural Development’s guaranteed loan handbook (HB-1-3555, Chapter 10, revised August 5, 2025) says its Guaranteed Underwriting System, GUS, “will determine the acceptable credit score to be used for the underwriting recommendation.” What happens next depends on the result:

1. GUS Accept. No credit score validation is required.
2. GUS Refer or Refer with Caution, or a manual file. At least one applicant whose income or assets are used for the loan must have a validated credit score.
3. Manual underwriting. The lender picks the middle of three scores, the lower of two (a repeating score can be used), or the single reported score. Our middle score rule page shows how other programs handle the same step.

A “validated” score means the applicant has two tradelines on the credit report that have been open for 12 months. USDA adds that a validated score “does not indicate the applicant has an acceptable credit history.” It only shows the score rests on enough data.

Example: Jordan and Sam apply together. Jordan has a 662 score, but both of Jordan’s cards were opened eight months ago. Sam has a 618 score with a car loan open three years and a card open two years. If GUS refers the file, Jordan’s score isn’t validated because neither account is 12 months old. Sam’s is. The file meets the validation rule through Sam, even though Sam’s score is lower.

What about the 640 everyone quotes?

You’ll find 640 cited across the internet as USDA’s minimum. The current Chapter 10 we read doesn’t set a 640 cutoff. It defers to GUS. A lender can still choose 640, or any other number, as its own overlay, so ask.

No score at all

Both programs leave room for people without a traditional file. VA’s regulation judges the “available credit data,” and USDA states plainly that “the use of a non-traditional credit history is not a reason to deny a loan.” For USDA, a credit report with no score must meet its nontraditional tradeline requirements, and applicants with no rent history need three tradelines. If you’re not sure whether you have a score at all, thin file vs. credit invisible explains the difference.

What to do before you apply

• Pull all three reports free at AnnualCreditReport.com and look at the last 12 months first, since both programs weigh it heavily.
• Write down the date of your most recent late payment, collection or public record. If it’s under 12 months old, consider whether waiting helps more than applying now.
• Ask each lender for its minimum score for VA or USDA, and whether it manually underwrites below that.
• For USDA, make sure at least one applicant whose income counts has two accounts open 12 months or longer.
• Run your debt-to-income math with the full new payment, taxes and insurance included.