@Anonymous wrote:
I am trying to repaid my damaged credit (Yes, I am ashamed) so that I can buy my first home in the next few years. On my report right now I have a charge off with Cap 1 that I am working on a Goodwill letter for. As well as 2 student loans I am working towards paying off. It is extremely hard to get new lines of credit to rebuild because my scores are all low 500's. I know this won't be a quick or easy fix. What do mortgage companies want to see on reports? What type of credit lines should I shoot for? I know the score needed is 620. What steps should I take first? ANY advice is appreciated!!
Don't be ashamed of your score because you are fixing it now. Most of us here have had our score problems and worked to get to a better score - just like you,
FHA will allow scores down to 580 (some lenders even lower).
You can leave the charge off alone if the goodwill letter doesn't work. It won't be counted against you in your DTI. But as you pointed out, getting new cc's are more difficult with the charge off showing. It is up to you if you still want to pursue the goodwill letter campaign - FHA insured loans do not require it to be paid off or even off your CR.
Mortgage companies want to see a history of at least 12 months of on time payments, no lates.
Your student loans - if they are in default - can be rehabbed. Go to the student loan subforum for details. This will help your score tremendously, more so than a consolidation.
Increasing your scores are two things: fixing the baddies and having new revolving credit if you don't have open revolving credit now. So if you want to get a credit card or two or three - it doesn't have to be large lines. Just watch the utilization on each card. A $500 credit line will work as well as a $5,000 credit line as far as lenders are concerned. Just have two of the three credit lines report zero and the third one report less than 9% of the individual credit limit. Try Capital One. They are good at giving anyone a start.
Starting Score: 601