The United States Department of Agriculture is the nation’s go-to agency for regulating farming, forestry, ranching, and food quality and safety. The agency is responsible for granting loans to eligible persons in the country without having to pay a percentage of the amount upfront. The process of sifting the eligible citizens from the ineligible before making a loan application decision can be an up-the-hill task. Fortunately, credit bureaus provide data to loan scheme operators and other financial services organisations to help them give loans to the most deserving segment of the population. So, what credit bureau does USDA use?
USDA works with all the consumer reporting agencies that operate nationwide. In making credit decisions, The USDA may ask a person for a credit report from any of the three credit bureaus. For example, some married persons may need a credit report from either Equifax, Experian, or TransUnion to get USDA loans.
How Does USDA Report Credit Data?
The Debt Cancellation Improvement Act (DCIA) requires USDA to report all federal loans to the credit reporting agencies. To do that, the USDA sends files to Equifax, Experian, and TransUnion at the end of every month. These files contain the previous month’s information on borrowers’ repayment status. The Credit bureaus collect and make this information available to those who need them to make credit-related decisions. When creditors access this information, they can see a consumer’s information, such as their identity and patterns of credit repayment. It helps them to know the most likely set of people to use their credit facilities. So, how does the DCIA protect consumers’ Privacy?
DCIA Also Protects Consumers’ Privacy
The Debt Cancellation Improvement Act (DCIA) also states the rules of engagement for the use of consumer’s credit data by the USDA and credit bureaus. Some of the rules are:
- You must be notified if a piece of information in your credit report was used in a decision that goes against you.
If a person or company uses any information in your credit report against you, they must tell you the name, address, and contact information of such person or company.
- Your credit bureau must give you access to your file information once you meet the requirements. The requirements may include your social security number, photo ID, and a payment. However, you are entitled to free access to your credit report once every year. Other than that, the reporting agency must disclose your credit information to you if: Someone has stolen your identity, someone has acted against your interest with your credit report data, your file has a fraud alert, and you are expected to apply for employment within two months (60 days to be exact).
- You can ask for your credit score to know your chances with the USDA.
You have the right to access your credit score from any reporting agency as long as you pay the required cost. If your information is inaccurate, you can dispute it. Credit bureaus could have incorrect information about you. If you find out, you can seek adjustment to it, and the agency must take steps to examine your claims and investigate where necessary.
Why Did I Not Get USDA Loans?
As you can imagine, many people apply for USDA loans without success. You probably didn’t meet the criteria. Like:
- You scored low on credit points. Credit score is a major criterion for accessing USDA Loans. You can get a housing loan for a score as low as 550, but most lenders require at least a minimum score of 620.
- You don’t have a stable and dependable income that would help them repay.
- Your residence is not a qualified area.
- Your adjusted household income is not more than 115% of the area’s median income.
You Can Boost Your Chances with USDA Loans By:
- In the past six months, you’ve not paid your mortgage late.
- In the past 12 months, you paid your last loans less than 30 days later.
- You waited 24 months after filing for bankruptcy or foreclosure.
Minimum Credit Score for a USDA Loan
While the USDA does not have a minimum credit score, the minimum credit you can score to get a loan through any USDA lenders is 640. USDA lenders use the automatic Guaranteed Underwriting System (GUS), which automatically disqualifies lower credit scores. The lower credit scores are less likely to live up to the loan terms. But you can still access a USDA mortgage-backed loan if you underwrite USDA manually.
Conclusion
The United States Department of Agriculture gives loans to eligible applicants: U.S citizens that have enough credit scores, income source (s) that can help them repay the loan, and the required adjusted household income level, among others. To make an accurate decision on loan applications, the USDA works with the three nationwide credit bureaus in the United States: Equifax, Experian, and TransUnion to access credit data.
