Can You Get A VA Loan With Open Collections On Credit?

While the VA does not provide specific guidelines for open collections, a lot of this process comes down to lender discretion and judgment. Here are how different collections typically play into the VA loan approval process:

• Medical Collections: Generally, medical collections are viewed as less severe due to the common understanding that healthcare costs can be unpredictable. They are unlikely to severely impact your loan approval.

• Child Support Collections: If you have outstanding child support collections, you may face significant challenges in securing a VA loan, as child support obligations can lead to wage garnishments and a complicated financial profile.

• Credit Card Collections: Recent collections on credit cards can hinder your approval chances, especially if they occurred within the past year. If these collections are older than a year and you have demonstrated a positive payment history otherwise, your chances of approval improve.

• IRS Collections: If you have IRS collections, it is beneficial to be on a payment plan. Lenders typically prefer to see you actively managing your obligations.

• Utilities and Other Small Collections: Smaller collections, like those from utility companies, tend to be more lenient, especially if they are minor amounts (e.g., under $200). In some cases, these collections can be overlooked, particularly if there is an explanation provided.