c. How to Analyze Credit (continued)

Absence of a credit history is not generally considered an adverse factor.  It may result when

·   recently discharged veterans have not yet developed a credit history 

·   applicants have routinely used cash rather than credit, and/or

·   applicants have not used credit since some disruptive credit event such as bankruptcy or debt pro-ration through consumer credit counseling.  In these cases, develop evidence of timely payment of noninstallment obligations such as rent and utilities since the disruptive credit event.

Reference:  For bankruptcy cases, see “Bankruptcy” in this section.

Accounts in the Spouse’s Name

Under ECOA - Upon the applicant’s request, the lender must consider any account reported in the name of the applicant’s spouse or former spouse that the applicant can demonstrate accurately reflects the applicant’s creditworthiness.

Consideration of the Spouse’s Credit History

ECOA prohibits requests for, or consideration of, the credit of a spouse who will not be contractually obligated on the loan except

·   if the applicant is relying on alimony, child support, or maintenance payments from the spouse (or former spouse), or

·   in community property states.

-   If the property is located in a community property state, VA requires consideration of the spouse’s credit (whether or not the spouse will be personally liable on the note and whether or not the applicant and spouse choose to have the spouse’s income considered).

-   If a married veteran wants to obtain the loan in his or her name only, the veteran may do so without regard to the spouse’s credit only in a non-community property state.