Chances at Mortgage...Lets fix things early!

[kmids]

Ok so I want to buy a condo. I have bad credit now but I’m working on it. Once I clean up my credit, and say it looks decent, I’ll still have tons of overdrafts and never paid my bills on time. It’s not a lack of money more of a lack of interest slash ADHD/Anxiety. I want to take the next six months for extreme preparation and I’d like to see my chances then. For now I want to know the possible problems and time it would take so I can mitigate problems as efficiently as possible.

I know chances are greater at FHA loan but I would like to know options as well. I just want to stop wasting money on rent and just save it in an ugly little condo so later when I’m 30 or so I can buy a real place.

1. Credit.  It’s bad now but lets say I get this to a 640 by December. I hope to have a lot of it taken off but there will be student loans I didn’t pay for years. I will pay them in full within the month.
2. Income.  46800, 10% 401k, 10k  401k loan paid over 3 years (I’m using to clean up credit and such)
3. Source of income.  Stable job, 2 promotions, same place for 6 years, always increases in pay, 2k bonuses a year.
4. Monthly debt payments.  Rent 1150, Cell 220, cable/int/tv 90,
5. Employment Engineering firm/govt contractor, I do procurement/subcontracting/export compliance
6. Assets/Reserves.  0 Savings, 10K in  401k (20k if you count the loan), after I pay off credit I’ll have 5k cash
7. Location.  San Diego, CA
8. Property.  I want a 2bd condo
9. Value.  100-130K
10. Occupancy.  Primary residence
11. Transaction Type.  I’m 26 and I’ll be doing it alone. No co-signers or anything like that.

[Cubist]

IMO, showing your ability to pay bills on time will help you the most aside from your fico scores. Starting now, pay everything on time. Having some positive trade lines will help also. Do you have positive accounts reporting to credit agencies currently?

[kmids]

Nope, that'll be part of my raising my score. I'll have 6 months of ontime secured card, Electricity bill, cell and rent. Also will need to start a savings to show I can save without taking money out. But I read that you need 2 years of all on time So that was discouraging.

[bhar04]

We were approved for a loan with an okay credit score and had horrible credit up until about a year ago. We made a conscious decisions to work very hard to improve our credit and pay everything on time. Like you for lack of let's say interest we paid nothing on time before. So the way we started was we purchased a car, now lucky for us our DTI was very low so that we knew would not be a problem when it came time to buy our home. We opened a second checking account that was strictly for paying bills and put everything that I could on automatic payment so that we had no choice but to make sure the money was ready and available. After a few months of paying that ontime and some old debt dropping of we started to see a climb in our credit it was slow and we surely are not at our goal, but in a year we were able to have good enough credit to get an FHA loan.

This was definitely something that we had to commit to but amazing once we started making a concise effort to pay our bills ontime we them found that we spent less which in turn meant we were able to start saving for our 3.5 down. Also we vowed to check our account daily to be sure that all balances were there to cover any payments and never allow a negative balance. Now we did have one in the last year but because the money was available in another account and we were able to fix it immediately the only required us to provide a letter of explanation.

Now our LO never asked for any proof of utilizes but that may have been because we had paid our rent and car payment ontime every month. In that 12 months we did not have one new debt report and we also did not have any lates report to our credit.

Good luck with your journey! It is definitely life changing at first but definitely for the better in the end. I know everyone situation is different but I thought this might help you to see a light at the end of the tunnel.

[kmids]

Wow thank you for answering! Yes I made that conscious decision about 2 months ago and started learning everything I needed this last month. I guess a year is understandable, at least it'll give me time to raise my score even more.

Thank you thank you thank you!

[sgtodd]

First time poster, long time lurker.

The information on this site is invaluable.  About a year and a half ago I started with scores in the 560-580 range.  I had 3 colleciton accounts and 4 charge offs.  The first step (before I found this place) was to hire Blue Sky Credit which I know many feel is a waste of money though I have to say they were able to remove a paid charge off from Amex and 2 of my collection accounts.  I settled two accounts and paid one off in full...again, before I found this place and did not PTD.  

I then got a Capital One credit card w/ a$500 limit (now up to $2000), an Orchard Bank w/$500 limit and Amex trusted me again with a Gold Card since I paid them off in full.  At the beginning of this year I never even dreamed I would be buying a house but after spending some time in the garden my scores are now TU 694, EQ 707 and EX 742.  I was able to qualify for a 10% down Conventional and if nothing last minute goes wrong I'll be way further ahead than I thought I was going to be this year.

I guess what I'm trying to say, pay attention to the info here and give yourself some time to clean up your credit and most important, pay all your bills on time, I was lax but life is so much easier when you take control of your credit.

[kmids]

I thought of hiring someone but the paranoia of getting ripped off was more than the anxiety of doing the repair myself. I sent out 15 DVs 2 days ago. I'm hoping to PIF anyone willing to delete and ill might hire someone to negotiate for me if my PDFs go unnanswered.

Your situation is my ideal. I believe in myself and I'm glad its achiveable.

[sgtodd]

If I had to do it over again I would have done it myself.  

Now that I think about it, working w/Blue Sky did lead me to a compltely worthless subscription to Freescore.com which at the time I had thought were true FICO scores.  DIY is the way to go if you have the time.