What must be done if adverse credit exists on a previous rural housing loan?

When adverse credit exists on a previous rural housing loan, it must be reviewed and approved by the local Rural Development (RD) office. This process ensures that the applicant's credit history is carefully considered, as adverse credit can impact their eligibility for a new loan. The review involves assessing the reasons for the adverse credit, the length of time since it occurred, and any mitigating factors that may demonstrate the applicant’s current ability to manage debt responsibly.

This step is crucial because the USDA loan program has specific guidelines regarding creditworthiness, and the local RD office plays a key role in evaluating whether an applicant with adverse credit can still qualify for assistance. By requiring this review, the RD office ensures that loans are granted to individuals who have the capability to maintain their mortgage payments, ultimately protecting both the borrower's and the government’s interests.