Chances of approval?? (long please bare with me and help!)

[cwwatts1202]

My husband and I plan to apply for a mortgage loan within the next 8-9 months if his credit score is up to par. Right now it is a 558 (up from a 511 march 10th) I expect another increase when a FP cc we just paid off last month (settled, it was CO) reports a $0 balance. Here is what his CR looks like-

Drive time reposession $7400 from Oct. 2008
Midland $225 old verizon home phone-due to fall off this month
National Credit Systems $2400 broken lease (we were actually let out of, long story) due to fall off in May
Credit Protection assoc. (brighthouse cable bill) $251 (still within SOL until August)
Midland $800ish verizon wireless bill from around April 2007
FP balance was like $368 settled for $225 Feb 11th, updated his CR March 10th and reported a $96 balance, it is supposed to report a $0 balance and settled, I called them and they said it will update when they report next month cause the CA we paid didn't notify FP or something Idk. I'm keeping an eye on that.

We also have an auto loan opened Jan 2012 paid on time every month, and he was just approved for a capital one secured card $200 CL with a $99 deposit. So after the 2 tradelines fall off, he will only have 3 baddies on his CR, and we plan to pay the cable bill one in July, so that will take it down to 2 baddies, the repo (which we just can not afford to pay, and will never have the money to) and the verizon wireless bill that is 6 years old. I got his score to increase from 511 to 558 in a month, i'm hoping it will be at least a 620 by the time we want to apply. What are the chances of approval for say a USDA or FHA with this sort of CR?? He hasn't had any collections other thant he FP cc in YEARS. I was told sometimes lenders will over look the score if you haven't had any collections recently (within a couple of years) our DTI is great, we only have the car loan, I'd just like some tips or advice. 

[tooleman694]

I would say about this time next year you might be ready. BTW do not pay any more collections unless they will be removed. Open a couple more CC cards.

[cwwatts1202]

Thanks for the tip! We plan to pay the cable one cause I read in the rebuilding forum people have had success with brighthouse pulling the debt out of collections and deleting if you PIF. I have to wait until it is out of SOL before I contact them though, which will be in August. I don't plan to pay any of the others because 2 are falling off, the repo we can't afford to pay, and the verizon wireless bill will come off on its own next year (unless we apply for a mortgage and they tell us to pay it). I planned to apply for another cc after having the capital one for 2-3 months, hoping for an unsecured with a small limit to avoid paying another deposit for a cc. We also want to refinance our auto, but from my understanding you shouldn't apply for any new credit 6 months before applying for a loan, but I wanted to wait until those 2 baddies fell off in the next 6 months before trying to refinance.

[tooleman694]

You can apply for credit for before a mortgage, you just gotta make sure your score can take the hit and that its not going to mess up your DTI.

[cwwatts1202]

Well right now we can't afford a hit :/ but our interest rate is through the roof, and his credit is better now than it was a year ago when we financed. Is auto refinancing a hard pull?

[tooleman694]

Yup its gonna be a hard pull, your looking at losing a few point between the pull and the new account.

[cwwatts1202]

Yikes! Ok, well I guess we will leave that alone until after we close on a home! lol

[MovingForward_2012]

Your score will probably recover from the auto refinance and the new credit accounts in 9 months...that is a good chunk of reporting time. Remember, new credit hurts initially but becomes beneficial to your score as the account ages. I lost 8 pts when my mortgage loan reported this month, but I know in 9 months, my score will be much better because of it.

[tooleman694]

But with a mid 500 score right now, they need every point they can get.

[cwwatts1202]

I actually don't know what the mid score is.. I only know equifax is 558, I don't know TU or EX. But yes, we need every point we can get!! We'd probably get a better rate if we waited until we owned a home anyway. Hopefully..