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No Credit Check Refinancing

When it comes to refinancing a VA loan, some people might be hesitant because their credit score dropped since obtaining the financing. The good news is that it’s still possible to get a refinance loan and reduce monthly repayments—all without a credit check.

There are many refinance options available under the VA loan program, but there’s only one that doesn’t require a credit check or appraisal. This is the VA Interest Rate Reduction Refinance Loan, or IRRRL for short.

Does a VA IRRRL Require a Credit Check?

Also known as the VA Streamline Refinance Loan, the IRRRL is currently the only option that includes a “no credit check” or “no appraisal” option.

IRRRLs are one of many refinancing options offered through the VA loan program to help borrowers lower their monthly repayments by issuing loans with potentially lower interest rates.

The reason VA IRRRL loans don’t require additional checks, underwriting or appraisals is because the borrower already provided the necessary information to qualify for the initial VA loan. In most cases, lenders won't require this for an IRRRL.

Can I Get Cash Back From a VA Loan?

A borrower may not receive cash proceeds from a VA IRRRL. In certain situations, the refinancing loan amount will be rounded down to avoid payments of cash to the borrower.

However, the borrower can receive a reimbursement for the cost of energy efficiency improvements up to $6,000 completed within the 90 days immediately preceding the loan’s closing date.

Some instances where the VA allows the borrower to receive cash are:

  • Computational errors
  • Changes in final pay-off figures
  • Up-front fees paid for the appraisal and/or credit report that are later added to the loan
  • Refund of the escrow balance on the old loan

Does My Credit Score Affect a VA IRRRL?

Typically, your credit score won’t affect a VA IRRRL, unless the lender has specific concerns about changes in your credit history.

Because you’ve already qualified, your lender will usually not require a new credit check or appraisal with a VA IRRRL. However, keep in mind that each lender is different and has varying eligibility criteria, even for IRRRLs. They might pull a new credit check if they believe it's necessary. If you currently have poor credit, this could impact your ability to get a VA IRRRL.

If you’re worried about your credit score, it’s worth the time or effort to repair it. Steps you can take include not taking on additional credit, lowering your credit utilization rate and fixing any errors you spot on your credit report.

For questions about VA IRRRL no credit check options or to discuss your situation, get in touch with a VA lenders today.