source:
  type: guide
  id: usda-hb-3555-10.4
  authority: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶10.4 —
    Credit Report Versions
  description: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶10.4
    — Credit Report Versions.
  coverage_tier: operative
obligations:
- id: usda-hb-3555-10.4-full
  canonical_id: usda-hb-3555-10.4-full
  section: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶10.4 — Credit
    Report Versions
  type: do
  tags:
  - regulator-direct
  - usda
  - usda-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶10.4
      — Credit Report Versions
    source_class: usda-handbook
    source_url: https://www.rd.usda.gov/sites/default/files/hb-1-3555_consolidated.pdf
    snapshot_id: 0466acd1ea2d17a4
    fetched_at: '2026-05-25T14:10:13Z'
    content_hash: sha256:22ac6f998ff72578e318fca138ebe80fb18ae2fc701eb5936172f1842679a13a
    paragraph_quote: '10.4 CREDIT REPORT VERSIONS The following table lists credit
      scoring models that are recognized by the Agency’s Guaranteed Underwriting System
      (GUS) and must also be used to manually underwrite guaranteed loans. Scoring
      Model Source Description Scoring Model Code Experian Experian/Fair Isaac risk
      Model v3 15 Experian New Experian Fair Isaac Model (FICO II) 6 Equifax Beacon
      5.0 13 Equifax Beacon 96 3 Transunion FICO Risk Score Classic (04) 14 Transunion
      FICO® Risk Score, Classic (98) 9 HB-1-3555 (03-09-16) SPECIAL PN 10-4 Revised
      (11-25-25) PN 651 Guidance documents lack the force and effect of law, unless
      expressly authorized by statute or incorporated into a contract. USDA may not
      cite, use, or rely on any guidance that is not available through their guidance
      portal, except to establish historical facts. ATTACHMENT 10-A CREDIT MATRIX
      Credit guidance: 3555.151(i) CONSIDERATIONS FOR CREDIT ANALYSIS ALL GUARANTEED
      LOANS: If the lender is aware of any potential derogatory or contradictory information
      that is not part of the data submitted to GUS, or if there is any erroneous
      information in the data submitted to GUS, the loan must be manually downgraded.
      CREDIT ALERT VERIFICATION REPORTING SYSTEM (CAIVRS) CAIVRS is a Federal government
      wide repository to file and report delinquent and/or defaulted claims on individuals
      that were paid on their behalf. CAIVRS may return the following results: x A:
      Approved by CAIVRS (no issues exist) x B: Multiple cases from one or more Federal
      agencies x C: Claim filed x D: Default on loan x F: Foreclosure of loan x J:
      Judgment filed An “A” response is the only acceptable result for an applicant
      to be eligible for a guaranteed loan. CAIVRS in GUS: x GUS will automatically
      retrieve the CAIVRS response for each applicant when the Borrower Information
      application page is saved. If the automatically retrieved CAIVRS response is
      not an “A” response, the lender must obtain evidence of an “A” CAIVRS response
      outside of GUS. This documentation must be uploaded as part of a complete loan
      application submission of the GUS application to USDA. The CAIVRS response cannot
      be overwritten or revised within GUS. USDA will retrieve and confirm an “A”
      CAIVRS response when the loan file is processed in the Agency’s internal Guaranteed
      Loan System (GLS). x If the CAIVRS system is unavailable at the time the lender
      initially completes the Borrower Information Application page, the user may
      manually retrieve the CAIVRS response by accessing the GUS Assets and Liabilities
      Page, under the CAIVRS Information section. Lenders can select the HUD CAIVRS
      hyperlink to access the CAIVRS website directly. The CAIVRS number retrieved
      in this manner must be manually entered into the applicable CAIVRS Number block.
      HB-1-3555 (03-09-16) SPECIAL PN 10-5 Revised (11-25-25) PN 651 Guidance documents
      lack the force and effect of law, unless expressly authorized by statute or
      incorporated into a contract. USDA may not cite, use, or rely on any guidance
      that is not available through their guidance portal, except to establish historical
      facts. CREDIT ALERT VERIFICATION REPORTING SYSTEM (continued) Loan Types Not
      Supported by GUS (Manually Submitted): x Lenders must obtain and document an
      eligible CAIVRS response and include this evidence in a complete loan submission
      to USDA. x Follow the instructions on the manual file submission process job
      aid for this type of submission, located at https://www.rd.usda.gov/resources/usda-linc-training-resource-library
      in the “Loan Origination” tab. ALL GUARANTEED LOANS: CAIVRS is not the only
      source to report a delinquent Federal debt. A delinquent Federal debt identified
      on the credit report, public records, or equivalent, must be investigated by
      the lender to determine if the debt is valid, paid in full, or the creditor
      has issued a release of liability. An applicant with a delinquent non-tax Federal
      debt is ineligible for a guaranteed loan. CREDIT SCORES AND VALIDATION A credit
      score is a statistical number that evaluates an applicant’s creditworthiness
      based on their credit history. The credit score considers payment history, amounts
      owed, percentage of credit used, length of credit history, types of credit,
      and newly acquired credit. GUS Loans: GUS will determine the acceptable credit
      score to be used for the underwriting recommendation for Accept, Refer, and
      Refer with Caution recommendations. GUS Accept/Accept with Full Documentation
      Files: No credit score validation is required. Manually Underwritten Loans and
      Loan Types Not Supported by GUS (Manually Submitted): Credit score validation
      is required. Lenders must select the middle of three scores, the lower of two
      (a repeating score may be used), or the single reported score. A credit report
      with no score must refer to non-traditional tradeline requirements. Validate
      Credit Score: GUS Refer, Refer with Caution, Manually Underwritten, and Loan
      Types Not Supported by GUS (Manually Submitted): One applicant whose income
      and/or assets is used to originate the loan must have a validated credit score.
      This applicant must have two tradelines on the credit report that have been/were/are
      open for 12 months based on the date the account was opened as stated on the
      credit report. A validated score does not indicate the applicant has an acceptable
      credit history. A validated score confirms that one applicant has an eligible
      minimum credit history. HB-1-3555 (03-09-16) SPECIAL PN 10-6 Revised (11-25-25)
      PN 651 Guidance documents lack the force and effect of law, unless expressly
      authorized by statute or incorporated into a contract. USDA may not cite, use,
      or rely on any guidance that is not available through their guidance portal,
      except to establish historical facts. CREDIT SCORES AND VALIDATION (continued)
      The following tradelines are eligible to validate the credit score and may be
      open, closed, and/or paid in full: loans (secured/unsecured), revolving accounts,
      installment loans, credit cards, collections, charge- off accounts, etc. Lenders
      may use an authorized user account to validate the credit score when one of
      the following is met: x The tradeline is owned by another applicant on the mortgage
      loan application; x The owner of the tradeline is the spouse of the applicant;
      or x The applicant can provide evidence that they have made payments on the
      account for the previous 12 months prior to submission to the Agency. Public
      records (bankruptcy, foreclosure, tax liens, judgments, etc.), disputed, self-reported,
      and deferred accounts are ineligible tradelines for credit validation. Common
      Scenario: x One or no eligible tradelines on the credit report? Consider a non-traditional
      credit history. Tradelines with at least a 12 month history on the credit report
      may be combined with non- traditional credit to meet the cumulative tradeline
      number requirement for a non-traditional credit history. One applicant whose
      income or assets are used to underwrite the loan must have an eligible traditional
      or non-traditional credit history. Refer to the Nontraditional credit section
      of this matrix for guidance. GUS Refer, Refer with Caution, and manually underwritten
      files are not eligible for debt ratio exceptions if: 1. There is not one applicant
      with a validated score using traditional tradelines on the credit report, or
      2. The file requires non-traditional credit tradelines. CREDIT INQUIRIES/RECENT
      DEBTS/UNDISCLOSED DEBTS A credit inquiry is a request by an institution for
      credit report information. A hard inquiry is requested when an applicant is
      seeking credit and completes a credit application. Hard inquiries are typically
      listed on the credit report and factored into the credit score. A soft inquiry
      is not included on the credit report and does not result in a new credit/debt.
      Soft inquiries may include a free annual credit report, companies developing
      marketing lists, prequalification offers, etc. Inquiries for credit made by
      the applicant(s) 90 days before the date of the credit report must be investigated
      to determine if new credit accounts were opened. Lenders must retain documentation
      in their permanent loan file to support newly identified debts. HB-1-3555 (03-09-16)
      SPECIAL PN 10-7 Revised (11-25-25) PN 651 Guidance documents lack the force
      and effect of law, unless expressly authorized by statute or incorporated into
      a contract. USDA may not cite, use, or rely on any guidance that is not available
      through their guidance portal, except to establish historical facts. CREDIT
      INQUIRIES/RECENT DEBTS/UNDISCLOSED DEBTS (continued) GUS Accept/Accept with
      Full Documentation Files: No downgrade is required. New installment or revolving
      accounts that are not reflected on the credit report in GUS and/or are not listed
      on the loan application but discovered during the mortgage loan application
      process must be manually entered on the GUS Assets and Liabilities page under
      the Liabilities – Credit, Cards, Other Debts and Leases that You Owe section.
      GUS Refer, Refer with Caution, Manually Underwritten Files, and Loan Types Not
      Supported by GUS (Manually Submitted): New installment or revolving accounts
      that are not reflected on the credit report in GUS and/or are not listed on
      the loan application but discovered during the mortgage loan application process
      must be manually entered on the GUS Assets and Liabilities page under the Liabilities
      – Credit, Cards, Other Debts and Leases that You Owe section or on the loan
      application for non-GUS loans. CREDIT EXCEPTIONS Credit repayment issues do
      not always reflect an inability or unwillingness to meet financial obligations.
      When evidence of significant derogatory credit is present, lenders may consider
      extenuating circumstances and determine if the applicant is creditworthy. The
      lender’s underwriter must use prudent underwriting judgment to evaluate loan
      requests that include significant derogatory credit. Refer to guidance in this
      Chapter to determine if a credit exception is required. GUS Accept/Accept with
      Full Documentation Files: No credit exception is required. GUS has determined
      the credit is an acceptable risk. Confirm the GUS Declarations page is accurately
      completed for each applicant. GUS Refer, Refer with Caution, Manually Underwritten
      Files, and Loan Types Not Supported by GUS (Manually Submitted): Credit exception
      is required. The credit exception must include the lender’s documented rationale
      on the underwriting transmittal summary or similar underwriting form. The rationale
      must meet the following: x The circumstances that led to the derogatory credit
      were temporary in nature, beyond the applicant’s control, and due to the current
      employment/financial/health of the household are unlikely to recur. Examples
      include but are not limited to temporary loss of job/unemployment, delay or
      reduction in benefits, illness, divorce, dispute over payment for defective
      goods or services, etc.; and HB-1-3555 (03-09-16) SPECIAL PN 10-8 Revised (11-25-25)
      PN 651 Guidance documents lack the force and effect of law, unless expressly
      authorized by statute or incorporated into a contract. USDA may not cite, use,
      or rely on any guidance that is not available through their guidance portal,
      except to establish historical facts. CREDIT EXCEPTIONS (continued) x The applicant
      must provide documentation to the approved lender for their permanent loan file
      that supports the extenuating circumstances; and x The approved lender must
      explain their rationale for issuing the credit exception (identified compensating
      factors, etc.) and why the applicant(s) remains an acceptable credit risk. The
      applicant’s explanation along with the supporting documentation must be consistent
      with other information in the file and retained in the lender’s permanent loan
      file (the documentation may be requested for Agency review). USDA does not approve
      the lender’s credit exception. Lenders are responsible for their credit decision.
      Previous USDA losses, delinquent non-tax Federal debts, delinquent child support,
      and ineligible CAIVRS results are not eligible for lender approved credit exceptions.
      NON-TRADITIONAL CREDIT Applicants that do not have a traditional credit history
      with a validated credit score, or no credit score may document their willingness
      to pay debt obligations through alternate sources. The use of a non- traditional
      credit history is not a reason to deny a loan. Regardless of the GUS recommendation,
      it is the approved lender’s responsibility to review and determine the loan
      meets Agency guidelines and is an acceptable credit risk. Applicants With a
      12-Month Verification of Rent (VOR): Multiple VORs may be combined to make up
      the 12 month requirement when no gaps exist. Two tradelines are required: The
      VOR plus one additional tradeline. This tradeline must be an eligible traditional
      tradeline from the credit report with a 12-month history or an eligible non-traditional
      tradeline. Applicants With No Rent History: Three tradelines are required. Tradelines
      may be a combination of traditional tradelines from the credit report with 12-month
      history or eligible non-traditional tradelines. Non-traditional credit may be
      documented as 1. A Non-Traditional Mortgage Credit Report (NTMCR), 2. Self-Reported
      tradelines on a traditional credit report, or 3. Evidence from third party verifications,
      canceled checks, money order receipts, electronic payments, payment histories
      from the creditor/company, bank statements that clearly identify debit payments
      for the service/product, etc. which demonstrate credit was extended to the applicant.
      Payments made in cash without accompanying direct or third party verifications
      are not acceptable documentation options. An eligible non-traditional tradeline
      must have a 12-month history and cannot have been closed more than 6 months
      prior to submission to the Agency. Examples of acceptable non-traditional credit
      sources include but are not limited to: HB-1-3555 (03-09-16) SPECIAL PN 10-9
      Revised (11-25-25) PN 651 Guidance documents lack the force and effect of law,
      unless expressly authorized by statute or incorporated into a contract. USDA
      may not cite, use, or rely on any guidance that is not available through their
      guidance portal, except to establish historical facts. NON-TRADITIONAL CREDIT
      (continued) x Rent or housing payments; x Utility services: gas, electric, water,
      land-line telephone service, or cable TV (when services are not included in
      rent payments); x Insurance payments: automobile, life, household, renter’s
      insurance, medical supplements. Premiums paid through payroll deduction for
      employee offered coverage of plans are ineligible. Premiums paid quarterly or
      annually are acceptable when the payment(s) provide 12 months of coverage. x
      Childcare: Direct or third-party verification provided by a licensed childcare
      facility or provider on letterhead must: 1. Identify the child enrolled; 2.
      Specify the date of enrollment; 3. Indicate any payment due; and 4. Provide
      a payment history. x School tuition; x Payments to local stores (car dealerships,
      department/furniture/appliance stores, specialty stores); x Payments for uninsured
      portions of medical bills; x Internet or cell phone services; x Automobile leases;
      x Personal loans with repayment terms in writing, supported with canceled checks,
      money order receipts, or electronic payment receipts; x Monthly subscription
      services, gym memberships, etc. when they can be adequately verified in accordance
      with this section; x 12 month documented history of savings that demonstrate
      regular deposits which equal three months of proposed mortgage (PITI) payments
      that will be retained as cash reserves post-closing; x Any other reference that
      gives insight into the applicant’s willingness to make periodic payments on
      a regular basis for recurring credit obligations. Debts that are obligatory,
      when credit was not extended to the applicant (such as child support, alimony,
      garnishments, court ordered debts), are not eligible non-traditional credit
      tradelines. Simply meeting the minimum tradelines for non-traditional credit
      should not be the sole basis for approval. The approved lender’s underwriter
      is responsible for analyzing the complete file when making an underwriting decision.
      Applicants that utilize non-traditional credit to qualify for a guaranteed loan
      are not eligible for debt ratio waivers. HB-1-3555 (03-09-16) SPECIAL PN 10-10
      Revised (11-25-25) PN 651 Guidance documents lack the force and effect of law,
      unless expressly authorized by statute or incorporated into a contract. USDA
      may not cite, use, or rely on any guidance that is not available through their
      guidance portal, except to establish historical facts. OVERDRAFT/NON-SUFFICIENT
      FUNDS (NSF) No credit exception is required. An overdraft fee is a fee resulting
      from the processing of a debit transaction that exceeds the account balance.
      A non-sufficient funds (NSF) fee is a fee resulting from the initiation of a
      transaction that exceeds the account balance if the financial institution declines
      to make the payment. Multiple overdraft or NSF fees are not considered significant
      derogatory credit. However, reoccurring overdraft/NSF fees could have a negative
      impact on the applicant’s credit accounts and repayment of the proposed mortgage
      debt. Therefore, the lender should evaluate the frequency of the NSF fee occurrences
      and the amount of the overdrafts in their credit decision. Lenders may choose
      to include these fees in the applicant’s monthly debt if they determine the
      fees are occurring regularly. Overdraft or NSF fees manually added to the Asset
      and Liabilities GUS application page will not result in a manual downgrade of
      a GUS Accept/Accept with Full Documentation file underwriting recommendation.
      RECENT/UNDISCLOSED DEBTS/INCREASED BALANCE OF EXISTING DEBTS IDENTIFIED AFTER
      A CONDITIONAL COMMITMENT IS ISSUED Lenders may discover new debt(s)/increased
      payments of existing debts/etc. after USDA issues a Conditional Commitment (Form
      3555-17/17E) but prior to loan closing. These debts/payment amounts were not
      part of the loan application submitted to USDA. Examples of these debts include
      but are not limited to installment debts, revolving credit lines, real estate
      taxes, final homeowner’s insurance premiums, etc. Cumulative Debt Amount of
      $50 or Less: When the additional monthly amount(s) of the new/increased debt(s)
      does not exceed $50, the lender may retain the issued Conditional Commitment.
      The lender must retain all documentation to support the new/increased debt(s)
      and payment(s) in the permanent loan file. No further action is required. Cumulative
      Debt Amount of $51 or More: Lenders must request the GUS loan to be released
      by USDA. Lenders must enter the new/increased debt(s) and payment amount(s).
      The lender must retain all documentation to support the data entries. A new
      preliminary underwriting submission must be completed to confirm the GUS underwriting
      recommendation. Lenders must upload documentation as applicable and complete
      a new final underwriting submission to USDA. USDA will issue a new Conditional
      Commitment. Lenders cannot close loans without a valid Conditional Commitment.
      HB-1-3555 (03-09-16) SPECIAL PN 10-11 Revised (11-25-25) PN 651 Guidance documents
      lack the force and effect of law, unless expressly authorized by statute or
      incorporated into a contract. USDA may not cite, use, or rely on any guidance
      that is not available through their guidance portal, except to establish historical
      facts. CREDIT ACCOUNTS AND ADVERSE CREDIT AUTHORIZED USER ACCOUNTS (AU) An authorized
      user is a person who has permission to use another person’s credit card/line
      of credit but is not legally responsible for payment of the debt. Lenders are
      not required to include monthly payments for an AU account in an applicant’s
      debt ratio. A closed AU account requires no consideration. An AU account that
      is classified as “terminated” is considered a closed tradeline. Lenders may
      continue to include the monthly debt at their discretion, if they determine
      the applicant is making the payment. AU accounts and credit score validation
      for GUS Refer, Refer with Caution, and manually underwritten loans is addressed
      in the Credit Scores and Validation section. CHAPTER 7 BANKRUPTCY (BK) Chapter
      7 of Title 11 of the U.S. bankruptcy code controls the process of asset liquidation.
      A trustee is appointed to liquidate nonexempt assets to pay creditors. After
      the proceeds are exhausted, the remaining debt is discharged. If the Chapter
      7 BK absolved a mortgage debt, the applicant is not legally liable to repay
      unless the debt was reaffirmed. Foreclosure action post BK discharge is against
      the property, not the applicant, to allow the lender to obtain title. However,
      until the property is fully titled to the lender, the applicant remains responsible
      for real estate taxes, home insurance premiums, HOA fees, special assessments,
      and similar debts. A Chapter 7 BK discharged more than 36 months at the time
      of submission to the Agency is not considered adverse credit. For a bankruptcy
      that has been dismissed, or not completed, the lender will need to evaluate
      the overall credit profile to determine if a credit exception is applicable.
      GUS Accept/Accept with Full Documentation Files: No credit exception is required.
      GUS may render an Accept underwriting recommendation for loan files that have
      been discharged from Chapter 7 BK less than 36 months. HB-1-3555 (03-09-16)
      SPECIAL PN 10-12 Revised (11-25-25) PN 651 Guidance documents lack the force
      and effect of law, unless expressly authorized by statute or incorporated into
      a contract. USDA may not cite, use, or rely on any guidance that is not available
      through their guidance portal, except to establish historical facts. CHAPTER
      7 BANKRUPTCY (continued) GUS Refer, Refer with Caution, Manually Underwritten
      Files, and Loan Types Not Supported by GUS (Manually Submitted): Credit exception
      is required. A Chapter 7 BK discharged within the previous 36 months is considered
      significant derogatory credit. If the approved lender determines the applicant(s)
      is creditworthy when their Chapter 7 BK has been discharged less than 36 months,
      a credit exception is required. Refer to the Credit Exception section for guidance.
      Include applicable items in the debt ratio unless evidence confirms the applicant
      is no longer in ownership. Lenders must retain documentation in their permanent
      loan file. CHAPTER 11, 12, OR 13 BANKRUPTCY (BK) Chapter 11, 12, and 13 U.S.
      bankruptcy proceedings allow the debtor to reorganize their finances and debt
      payments under the supervision and approval of the court. An impartial trustee
      consolidates the debt and distributes money to each creditor. For a bankruptcy
      that has been dismissed or not completed, the lender will need to evaluate the
      overall credit profile to determine if a credit exception is applicable. Plan
      in Progress: An applicant with a Chapter 11, 12, or 13 BK in progress must meet
      the following: All required payments have been made on time; and x The applicant
      has written permission from the bankruptcy court/trustee to enter into a mortgage
      transaction. If the bankruptcy court/trustee does not review or issue permissions,
      the creditor may determine if the applicant is an acceptable credit risk. Confirm
      all payment amounts for the Chapter 11, 12, or 13 BK are included on the Asset
      and Liabilities application page in GUS or on the loan application. GUS Accept/Accept
      with Full Documentation Files: No credit exception is required. GUS may render
      an Accept underwriting recommendation. No downgrade is required due to the manual
      entry of the monthly BK payment. GUS Refer, Refer with Caution, Manually Underwritten
      Files, and Loan Types Not Supported by GUS (Manually Submitted): No credit exception
      is required. Lender must obtain documentation to verify that 12 months of the
      debt restructure plan has elapsed and retain in their permanent loan file. HB-1-3555
      (03-09-16) SPECIAL PN 10-13 Revised (11-25-25) PN 651 Guidance documents lack
      the force and effect of law, unless expressly authorized by statute or incorporated
      into a contract. USDA may not cite, use, or rely on any guidance that is not
      available through their guidance portal, except to establish historical facts.
      CHAPTER 11, 12, OR 13 BANKRUPTCY (continued) Completed/Discharged Plan – GUS
      Accept/Accept with Full Documentation Files: No credit exception is required.
      Completed/Discharged Plan (12 months or more) - GUS Refer, Refer with Caution,
      Manually Underwritten files, and Loan Types Not Supported by GUS (Manually Submitted):
      No credit exception required. Completed/Discharged Plan (less than 12 months)
      - GUS Refer, Refer with Caution, Manually Underwritten Files, and Loan Types
      Not Supported by GUS (Manually Submitted): Credit exception required. Plans
      completed less than 12 months prior to submission to the Agency will require
      a credit exception. Lenders must retain documentation in their permanent loan
      file. Refer to guidance in the Credit Exception section. CHARGE-OFFS A charge-off
      is a debt that was determined unlikely to be collected by the creditor due to
      substantial delinquency. Creditors may sell the debt to a collection company
      or pursue a judgment against the borrower if the statute of limitations has
      not expired to collect the debt. This adverse credit is reflected in the credit
      score. The approved lender’s underwriter must review all charge-off accounts
      and determine if the applicant(s) is an acceptable credit risk, regardless of
      GUS underwriting recommendation. USDA does not require charge-off accounts to
      be paid. If the applicant has a repayment plan with the creditor for a charged
      off debt, include the payment in the Asset and Liabilities GUS application page
      or on the loan application. GUS Accept/Accept with Full Documentation files:
      No credit exception is required. GUS Refer, Refer with Caution, Manually Underwritten
      Files, and Loan Types Not Supported by GUS (Manually Submitted): No credit exception
      is required. HB-1-3555 (03-09-16) SPECIAL PN 10-14 Revised (11-25-25) PN 651
      Guidance documents lack the force and effect of law, unless expressly authorized
      by statute or incorporated into a contract. USDA may not cite, use, or rely
      on any guidance that is not available through their guidance portal, except
      to establish historical facts. COLLECTIONS A collection is a debt that has been
      assigned/sold to a third-party debt collection agency due to negligent payment
      of the borrower. This adverse credit is reflected in the credit score. The approved
      lender’s underwriter must review all collection accounts and determine if the
      applicant(s) is an acceptable credit risk, regardless of GUS underwriting recommendation.
      USDA does not require medical collection accounts to be paid. If the cumulative
      total of all non-medical collections exceeds $2,000, the following options will
      apply: 1. Require payment in full of these accounts prior to loan closing; 2.
      Use an existing repayment agreement or require payment arrangements be made
      with documentation from the creditor and include the monthly payment; or 3.
      Include 5 percent of the outstanding balance as the monthly liability amount,
      no further documentation required. All open collection accounts on the credit
      report must be listed on the GUS Assets and Liabilities page under the Liabilities
      – Credit Cards, Other Debts, and Leases that You Owe section and/or on the loan
      application. GUS Data Entry: x Collections that will be paid at or before loan
      closing should select the “To be paid off at or before closing” checkbox. x
      If the collection is not required to be paid in full, the lender should select
      the “Omit” checkbox and provide an explanation in the additional data entry
      pop up box to state why the debt will be omitted from ratio consideration. If
      a repayment agreement has a specified monthly payment, include that amount.
      Do not enter “$1.00” in the monthly payment data field unless this is a documented
      repayment amount. GUS Accept/Accept with Full Documentation Files: No credit
      exception is required. GUS Refer, Refer with Caution, Manually Underwritten
      Files, and Loan Types Not Supported by GUS (Manually Submitted): No credit exception
      is required. HB-1-3555 (03-09-16) SPECIAL PN 10-15 Revised (11-25-25) PN 651
      Guidance documents lack the force and effect of law, unless expressly authorized
      by statute or incorporated into a contract. USDA may not cite, use, or rely
      on any guidance that is not available through their guidance portal, except
      to establish historical facts. CONSUMER CREDIT COUNSELING - DEBT MANAGEMENT
      PLANS Credit counseling provides guidance and support to consumers which may
      include assistance to negotiate with creditors on behalf of the borrower to
      reduce interest rates, late fees, and agree upon a repayment plan. The credit
      score will reflect the degradation of credit due to participation in this plan.
      Credit accounts that are included in the repayment plan may continue to report
      as delinquent or as late pays. This is typical and will not be considered as
      recent adverse credit. Lenders must retain documentation to support the accounts
      included in the debt management plan and the applicable monthly payment. Lenders
      must include the monthly payment amount due for the counseling plan in the monthly
      liabilities. GUS Accept/Accept with Full Documentation Files: No credit exception
      is required. GUS Refer, Refer with Caution, Manually Underwritten Files, and
      Loan Types Not Supported by GUS (Manually Submitted): No credit exception is
      required. The following must be documented and retained in the lender’s permanent
      loan file: x One year of the payment period of the debt management plan has
      elapsed; x All payments have been made on time; and x Written permission from
      the counseling agency to recommend the applicant as a candidate for a new mortgage
      loan debt. DELINQUENT COURT ORDERED CHILD SUPPORT An applicant that is delinquent
      on court ordered child support that is subject to collection by an administrative
      offset is ineligible for a guaranteed loan unless the payments are brought current,
      the debt is paid in full, or otherwise satisfied by a documented release of
      liability. An applicant that is delinquent on court ordered child support that
      is not subject to an administrative offset is ineligible for a guaranteed loan
      unless the applicant has an approved repayment agreement in place with three
      timely payments made prior to loan closing, the arrearage is paid in full prior
      to loan closing, or a release of liability is documented. In all cases, the
      lender must provide certification of the applicant’s eligibility as part of
      the application submission. Any documentation obtained to support the lender’s
      certification to the Agency will be retained in the lender’s permanent loan
      file. HB-1-3555 (03-09-16) SPECIAL PN 10-16 Revised (11-25-25) PN 651 Guidance
      documents lack the force and effect of law, unless expressly authorized by statute
      or incorporated into a contract. USDA may not cite, use, or rely on any guidance
      that is not available through their guidance portal, except to establish historical
      facts. DELINQUENT FEDERAL NON-TAX DEBT A non-tax Federal debt is a debt owed
      to the U.S. Federal Government other than Federal income taxes. Federal debts
      are typically discovered when the lender reviews the Credit Alert Verification
      Reporting System (CAIVRS) result, credit report, public records, or equivalent.
      An applicant with a delinquent Federal non-tax debt is ineligible until the
      debt is paid in full, or a release of liability is documented. The lender must
      provide certification of the applicant’s eligibility to the Agency as part of
      the application submission. Any documentation obtained to support the lender’s
      certification to the Agency will be retained in the lender’s permanent loan
      file. FEDERAL TAXES Federal taxes are due each year on the date determined by
      the Internal Revenue Service (IRS). Taxpayers who owe taxes and do not pay in
      full by the filing date are determined delinquent by the IRS. An IRS approved
      extension to file a tax return does not grant the applicant additional time
      to pay their taxes due. Applicants must pay their estimated income tax due by
      the IRS filing date, or they are determined delinquent by the IRS. An applicant
      that has owed taxes on previous filed return(s) exhibits a pattern of taxes
      due; therefore, an estimated tax payment must be made to the IRS by the specified
      deadline. The applicant may file their return at a later date and remain eligible
      for a guaranteed loan. An applicant that has received tax refunds for previous
      filed return(s) may remain eligible with no estimated tax payment due to the
      IRS because they would not be determined delinquent. The applicant will remain
      eligible for a guaranteed loan. Repayment Plans: No credit exception is required.
      An applicant with delinquent Federal tax debt is ineligible unless they have
      proof of repayment plan(s) approved by the IRS. A minimum of three timely payments
      must have been made on each active repayment plan(s). Timely is defined as payments
      that coincide with the approved IRS repayment agreement(s). The applicant may
      not prepay a lump sum at one time to equal three monthly payments to meet this
      requirement. Refer to Chapter 11 for monthly repayment requirements. The lender
      must provide certification of the applicant’s eligibility to the Agency as part
      of the application submission. Evidence of the repayment agreement(s) and payment
      history used to support the lender’s certification to the Agency will be retained
      in the lender’s permanent loan file. While applicants with multiple approved
      IRS repayment plan(s) are eligible, the approved lender’s underwriter must review
      and determine if the applicant(s) is an acceptable credit risk. Failure to File:
      Applicants that are required to file taxes but have failed to do so for the
      current or previous years are ineligible. HB-1-3555 (03-09-16) SPECIAL PN 10-17
      Revised (11-25-25) PN 651 Guidance documents lack the force and effect of law,
      unless expressly authorized by statute or incorporated into a contract. USDA
      may not cite, use, or rely on any guidance that is not available through their
      guidance portal, except to establish historical facts. DISPUTED ACCOUNTS: A
      disputed account occurs when the applicant questions the validity of a transaction
      registered to the account. When a dispute is submitted to a creditor, a review
      is completed to determine if the debt continues to be due from the applicant.
      Most disputes are reviewed and finalized within 90 days. The applicant must
      provide the lender with applicable documentation to support the reason and basis
      of their dispute with the creditor. The documentation must be retained in the
      permanent loan file. Disputed accounts that must be considered are: x All non-medical
      collections and x Accounts with late payments in the last 24 months. For all
      GUS recommendations/loan submission types, the lender may exclude the following
      disputed account scenarios from further guidance in this section: x Disputed
      medical accounts/collections; x Disputed charged off accounts; x Disputed derogatory
      accounts that are the result of identity theft, credit card theft, or unauthorized
      use when evidence (police report, attorney correspondence, creditor statement)
      is provided to support the applicant’s explanation; or x Disputed accounts of
      a non-purchasing spouse in a community property state. DISPUTED NON-DEROGATORY
      ACCOUNTS: GUS Accept/Accept with Full Documentation Files: No credit exception
      is required. A GUS Accept recommendation is required to be downgraded unless
      one of the following are met: x The disputed tradeline has a zero balance; x
      The disputed tradeline states “paid in full” or “resolved” on the credit report;
      x The disputed tradelines are 24 months or greater; x The disputed tradeline
      is current and paid as agreed; x The payment stated on the credit report is
      included in the monthly debts; x Five percent of the stated account balance
      on the credit report is included in the monthly debts if no payment is listed
      on the credit report; or x A documented payment from the creditor is included
      in the monthly debts. HB-1-3555 (03-09-16) SPECIAL PN 10-18 Revised (11-25-25)
      PN 651 Guidance documents lack the force and effect of law, unless expressly
      authorized by statute or incorporated into a contract. USDA may not cite, use,
      or rely on any guidance that is not available through their guidance portal,
      except to establish historical facts. DISPUTED ACCOUNTS (continued): GUS Refer,
      Refer with Caution, Manually Underwritten Files, and Loan Types Not Supported
      by GUS (Manually Submitted): No credit exception is required. Lenders must determine
      the impact of the disputed account on the repayment of the proposed mortgage
      debt. Each account must include a minimum monthly payment of: x The payment
      stated on the credit report; If no payment listed, use x Five percent of the
      balance of the account; or x A lesser amount documented from the creditor. DISPUTED
      DEROGATORY ACCOUNTS: GUS Accept/Accept with Full Documentation Files: No credit
      exception is required. GUS Accept files with less than $2,000 in disputed derogatory
      accounts will require the lender to determine if the disputed accounts may impact
      the applicant’s ability to repay the proposed mortgage obligation. Each account
      (excluding those listed above) must include a minimum monthly payment of: x
      The payment stated on the credit report. If no payment listed, use x Five percent
      of the balance of the account; or x A lesser amount documented from the creditor.
      GUS Accept/Accept with Full Documentation files must be downgraded to a Refer
      when the applicant has $2,000 or more collectively in disputed derogatory accounts
      in the last 24 months. Refer, Refer with Caution, Manually Underwritten Files,
      and Loan Types Not Supported by GUS (Manually Submitted): No credit exception
      is required. The lender must analyze the potential impact to the applicant’s
      ability to repay the proposed mortgage debt with disputed derogatory accounts.
      Each account (excluding those listed above) must include a minimum monthly payment
      of: x The payment stated on the credit report; If no payment listed, use x Five
      percent of the balance of the account; or x A lesser amount documented from
      the creditor. HB-1-3555 (03-09-16) SPECIAL PN 10-19 Revised (11-25-25) PN 651
      Guidance documents lack the force and effect of law, unless expressly authorized
      by statute or incorporated into a contract. USDA may not cite, use, or rely
      on any guidance that is not available through their guidance portal, except
      to establish historical facts. GARNISHMENTS No credit exception is required.
      A garnishment is a legal process that instructs a third party to deduct payments
      directly from a debtor’s wage or bank account for defaulted payments. A garnishment
      may be deducted by the debtor’s employer and disclosed on earnings statements.
      Garnishments must be included in the debt ratio. Garnishments manually added
      to the Asset and Liabilities GUS application page will not result in a manual
      downgrade of a GUS Accept/Accept with Full Documentation file underwriting recommendation.
      Review the debt type paid through the garnishment to ensure the applicant remains
      eligible for a guaranteed loan. NON-FEDERAL JUDGMENT No credit exception is
      required. A judgment is a formal decision made by a court following a lawsuit.
      The judgment is a legally enforceable court order which could result in various
      methods to collect the debt. Court ordered judgments must be paid in full or
      have evidence of three timely payments made per an agreement with the creditor.
      The applicant may not prepay a lump sum at one time to equal three monthly payments
      to meet this requirement. The lender must retain evidence of the repayment agreement
      and payment history in their permanent file. Include the monthly payment (if
      applicable) in the debt ratio. A GUS Accept/Accept with Full Documentation file
      is not required to be downgraded due to the manual entry of the payment. Confirm
      the Declarations in GUS and/or the loan application accurately reflect the presence
      of a judgment. NON-PURCHASING SPOUSE DEBTS (NPS) Lenders must follow applicable
      community property state (CPS) lending laws when the applicant(s) and/or property
      reside in a CPS. The credit history of the NPS is not a reason to deny a loan
      application. Lenders are responsible to know CPS laws and requirements for the
      treatment of NPS debts. The credit report for the NPS must be obtained outside
      of GUS and retained in the lender’s permanent loan file. All NPS debts required
      to be included based on state law must be manually entered in GUS. Lenders will
      identify the NPS debts by selecting “Other” as the Account Type Description
      and entering “NPS debt” in the pop-up box. HB-1-3555 (03-09-16) SPECIAL PN 10-20
      Revised (11-25-25) PN 651 Guidance documents lack the force and effect of law,
      unless expressly authorized by statute or incorporated into a contract. USDA
      may not cite, use, or rely on any guidance that is not available through their
      guidance portal, except to establish historical facts. NON-PURCHASING SPOUSE
      DEBTS (continued) NPS debt(s) that the lender has determined to exclude will
      not be entered into GUS. The lender will retain documentation in their permanent
      loan file that supports exclusion (a copy of the state statute that allows exclusion
      of the NPS debt). A GUS Accept/Accept with Full Documentation file is not required
      to be downgraded due to the manual entry of NPS debts. Some states and territories
      have been identified as community property states or territories: Arizona, California,
      Guam, Idaho, Louisiana, Nevada, New Mexico, Puerto Rico, Texas, Washington,
      and Wisconsin. Individual jurisdictions regarding community property regulations
      may change and the list above is not all inclusive. Therefore, it is the lender’s
      responsibility to ensure compliance with these requirements. DEED-IN-LIEU (DIL)
      A deed-in-lieu of (DIL) foreclosure allows the borrower to convey or deed all
      interest in a property to the lender to satisfy a loan in default and avoid
      foreclosure. The DIL will be reflected in the applicant’s credit score and public
      records. Lenders must confirm the Declarations in GUS and/or on the loan application
      are completed accurately. A DIL recorded 36 months prior to the date of submission
      to the Agency is not adverse credit. The 36- month period will begin on the
      date of the DIL or the date that the applicant transferred ownership of the
      property to the lender. GUS Accept/Accept with Full Documentation Files: No
      downgrade or credit exception is required. Refer, Refer with Caution, Manually
      Underwritten Files, and Loan Types Not Supported by GUS (Manually Submitted):
      Credit exception is required. A credit exception is required for a DIL within
      the 36 months prior to submission to the Agency. Lenders must retain documentation
      in their permanent loan file. Refer to the Credit Exception section for guidance.
      An applicant that has a DIL recorded post-divorce/filed legal separation agreement
      and the home was awarded to the ex-spouse/remaining party may document the loan
      was paid as agreed prior to date of divorce decree/legal separation agreement.
      The payment history on the credit report or other documentation from the loan
      servicer/lender must be retained in the lender’s permanent loan file to confirm
      eligibility. HB-1-3555 (03-09-16) SPECIAL PN 10-21 Revised (08-05-25) PN 649
      Guidance documents lack the force and effect of law, unless expressly authorized
      by statute or incorporated into a contract. USDA may not cite, use, or rely
      on any guidance that is not available through their guidance portal, except
      to establish historical facts. FORECLOSURE OR REPOSSESSION A foreclosure is
      the legal process by which a lender takes control of a property, evicts the
      homeowner (if necessary), and sells the property to attempt to satisfy the debt.
      The current owner(s) is no longer able or willing to make the required or agreed
      upon payments as stipulated in the contract. Repossessions occur when the borrower
      cannot or will not remit payment for the collateral secured with the lender.
      The lender may sell the collateral to satisfy the debt. A deficiency balance
      may remain. If there is a balance remaining, the outstanding debt would need
      to be treated the same as a collection account, unless there is documentation
      that the outstanding balance has been charged off. Refer to the Collections
      or Charge-offs section for guidance. These adverse credit actions will be reflected
      in the applicant’s credit score and public records, as applicable. Lenders must
      confirm the Declarations in GUS and/or on the loan application are completed
      accurately. GUS Accept/Accept with Full Documentation Files: No credit exception
      is required. Refer, Refer with Caution, Manually Underwritten Files, and Loan
      Types Not Supported by GUS (Manually Submitted): Credit exception is required.
      When an applicant has a foreclosure discharged or a repossession reported within
      the 36 months prior to submission to the Agency, this is considered significant
      derogatory credit and requires a credit exception. Lenders must retain documentation
      in their permanent loan file. Refer to the Credit Exception section for guidance.
      The 36-month period will begin on the date in which the title transferred from
      the applicant. An applicant that has a foreclosure discharged or a repossession
      reported post-divorce/filed legal separation agreement and the home was awarded
      to the ex-spouse/remaining party may document the loan was paid as agreed prior
      to date of divorce decree/legal separation agreement. The payment history on
      the credit report or other documentation from the loan servicer/lender must
      be retained in the lender’s permanent loan file to confirm eligibility. USDA
      considers the loss of a timeshare adverse credit of a long-term obligation and
      not a foreclosure. This loss will be reflected in the credit score. Lenders
      must review the applicant’s credit history to determine if they are an acceptable
      credit risk. No credit exception is required for the loss of a timeshare. HB-1-3555
      (03-09-16) SPECIAL PN 10-22 Revised (08-05-25) PN 649 Guidance documents lack
      the force and effect of law, unless expressly authorized by statute or incorporated
      into a contract. USDA may not cite, use, or rely on any guidance that is not
      available through their guidance portal, except to establish historical facts.
      SHORT SALE A short sale allows a homeowner to sell their property for less than
      the balance due on the mortgage. All sales proceeds go to the lender. The lender
      will either forgive the difference owed or a deficiency judgment may be obtained
      to require the borrower to repay the lender all or part of the remaining balance.
      The short sale will be reflected in the applicant’s credit score and public
      records. Lenders must confirm the GUS Declarations page and/or the loan application
      are completed accurately. A short sale closed 36 months prior to the date of
      submission to the Agency is not adverse credit. GUS Accept/Accept with Full
      Documentation Files: No credit exception is required. Refer, Refer with Caution,
      Manually Underwritten Files, and Loan Types Not Supported by GUS (Manually Submitted):
      Credit exception is required. A credit exception is required when the applicant
      has a short sale closed within the 36 months prior to submission to the Agency.
      Refer to the Credit Exception section for guidance. An applicant that has a
      short sale closed post-divorce/recorded legal separation agreement and the home
      was awarded to the ex-spouse/remaining party may document the loan was paid
      as agreed prior to date of divorce decree/legal separation agreement. The payment
      history on the credit report or other documentation from the loan servicer/lender
      must be retained in the lender’s permanent loan file to confirm eligibility.
      PREVIOUS USDA LOSS An applicant with a previous Section 502 Single Family Housing
      Direct or Guaranteed loan that resulted in a loss paid by the Federal government
      may be considered to have significant derogatory credit. A previous USDA loss
      that occurred more than seven years prior to the date of submission to the Agency
      is not considered derogatory credit. A previous USDA loss that occurred within
      seven years prior to the date of submission is considered significant derogatory
      credit which requires the lender to request an Agency approved credit exception.
      The lender must provide the following information: x Explain and document the
      circumstances that led to the loss paid on their behalf. For example, if the
      loss was due to reduced wages, IRS tax transcripts would document the loss of
      income. Medical explanations are not required to submit private health information.
      Lenders must explain why the loss is unlikely to recur. For example, losses
      due to unemployment and no medical insurance would show a new stable work history
      with medical benefits; and HB-1-3555 (03-09-16) SPECIAL PN 10-23 Revised (08-05-25)
      PN 649 Guidance documents lack the force and effect of law, unless expressly
      authorized by statute or incorporated into a contract. USDA may not cite, use,
      or rely on any guidance that is not available through their guidance portal,
      except to establish historical facts. PREVIOUS USDA LOSS (continued) x The lender
      must provide the supporting documentation and recommendation for loan approval
      along with the final and complete application submission to the Agency. The
      lender’s approval recommendation should include an explanation of positive aspects
      of the loan file that would contribute to future homeownership success. Examples
      include but are not limited to: Stable job time of 2 years or more, low qualifying
      ratios, reserves available post loan closing, etc. USDA will review the explanation
      and supporting documentation and make the final determination of the applicant(s)
      eligibility for a new guaranteed loan. RENT/MORTGAGE PAYMENT HISTORY An indicator
      of future mortgage payment probability is the applicant’s payment of their current
      rent or housing. Lenders should include the current rent or mortgage payment
      amounts on the Income and Expenses GUS application page and/or the loan application.
      ALL GUARANTEED LOANS: Lenders should closely evaluate applicants who will pay
      a significantly higher proposed mortgage payment in comparison to their current
      housing payment or who have had no previous housing obligations. Applicants
      paying higher housing payments than what they are currently paying is considered
      a risk factor and can lead to mortgage default. The underwriter should review
      the impact of this risk and the probability that the applicants will be able
      to repay their new mortgage obligation as part of their review. GUS Accept/Accept
      with Full Documentation Files: No credit exception is required. No Verification
      of Rent (VOR) required. GUS Refer, Refer with Caution, Manually Underwritten
      Files, and Loan Types Not Supported by GUS (Manually Submitted): Credit exception
      may be required. A VOR may be required. Refer to the GUS Underwriting Findings
      Report to determine if a VOR is required for a complete loan application. HB-1-3555
      (03-09-16) SPECIAL PN 10-24 Revised (08-05-25) PN 649 Guidance documents lack
      the force and effect of law, unless expressly authorized by statute or incorporated
      into a contract. USDA may not cite, use, or rely on any guidance that is not
      available through their guidance portal, except to establish historical facts.
      RENT/MORTGAGE PAYMENT HISTORY (continued) All housing payments entered in GUS
      must be adequately verified and documented. Lenders are required to verify any
      housing payments made within the previous 12 months. Rent or mortgage payment
      histories from a family member or other interested party will not be considered
      unless 12 months of canceled checks, money order receipts, or electronic payment
      confirmations are provided. Applicants with no verifiable history of housing
      payments are not automatically ineligible. The approved lender’s underwriter
      must review the available documentation to determine if the applicant has an
      acceptable credit history and meets program guidance. One rent or mortgage payment
      paid 30 or more days past due in the previous 12 months is considered significant
      derogatory credit and will require a credit exception. Lenders must retain documentation
      in their permanent loan file. Refer to the Credit Exception section for guidance.
      HB-1-3555 (03-09-16) SPECIAL PN 11-1 Revised (05-05-25) PN 640 Guidance documents
      lack the force and effect of law, unless expressly authorized by statute or
      incorporated into a contract. USDA may not cite, use, or rely on any guidance
      that is not available through their guidance portal, except to establish historical
      facts. CHAPTER 11: RATIO ANALYSIS'
  judgment: false
