Hello I am new here. I have been reading quite a bit but this is my first post. Hubby and I are now wanting to buy our first home. He is 42 and I am 38. We both have good jobs and have had them for 3+ years. However we have made some credit mistakes in the past. We have some things on our credit report that need to be paid. Mostly medical collection as we had 3 children and at times no insurace. We are working to pay these. We have under 5000 in collection accounts on our report. Some of these will age off at different times in 08. However we would like to try to buy a home sooner. We pulled our scores about 8 months or so ago, and they were in the low 500 range. We do have a unsecured loan that is being paid monthly with no lates and a secured loan that was paid off with no lates and we also have one credit card, paid monthly with no lates. Where should we begin in this journey? Will anyone finance us? Thanks
Remember the old ecology saying, "the solution to pollution is dilution?"
You don't have enough positive tradelines. I would go for a secured card...if you don't have any baddies for the past two years see about getting a BofA "99/500" card (you pony up $99 for collateral, they give you a CC with a $500.) I would get two secured cards (you probably can't get unsecured with FICOs in the low 500s).
Keep your utilization under 10%, pay on time, etc. This will begin to dilute your bad credit with more good credit history (three current TLs, all in good standing). You'd be surprised how much you can raise your FICO by the end of the year--probably a good 20 to 40 points. It takes about six to nine months after establishing a new tradeline for the positive effects to really begin to kick in, but kick in they will.
And if you haven't bugged your current CC issuer for a CLI this year, do so.
- - - - in a credit-scoring postnuclear Stone Age...
Is everything on your reports correct? if not start disputing inaccurate info. like NWM said add a couple more TL's from what i've read you need a mix of credit ie...revolving and installment. I believe dilution is key also as i've added several TL's, initially i took a ding in score but they are creeping up now.