VA Loan with issues...

[Joai]

Hello all!  I had a question before I make my first move.  I have a few DQs that need to be handled.  I have an old Navy Fed CC that was charged off and I was wondering should I pay it in full (round $5700) or accept the settlement they mailed to my home.  I also have an CO Cap 1 CC that has a balance of around $700.  I also have a PIF loan from USA finance but they just said it hasa zero balance and that didn't budge my score like at all.  Those 2 charge offs are killing my mortgage scores.  The Lighthouse rep said to handle the Navy Fed for sure.  But works best in the scenaro of buying a home?  I want to go through the Navy Fed VA loan program but I don't know where to start.  Any advice would be greatl appreciated!

[VALoanMaster]

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@Joaiwrote:

Hello all!  I had a question before I make my first move.  I have a few DQs that need to be handled.  I have an old Navy Fed CC that was charged off and I was wondering should I pay it in full (round $5700) or accept the settlement they mailed to my home.  I also have an CO Cap 1 CC that has a balance of around $700.  I also have a PIF loan from USA finance but they just said it hasa zero balance and that didn't budge my score like at all.  Those 2 charge offs are killing my mortgage scores.  The Lighthouse rep said to handle the Navy Fed for sure.  But works best in the scenaro of buying a home?  I want to go through the Navy Fed VA loan program but I don't know where to start.  Any advice would be greatl appreciated!

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I doubt NFCU will approve you for a mortgage since you have a bad history with them. Most banks will deny new credit when their is an existing derogatory history. 

What are your current scores & why do you want to go with NFCU?

[Joai]

I have the option to either pay if off completely or settle.  I don't have to go thru Navy federal.  It would leave me with no money if I pay the $5,879 in full.  The Lighthouse rep says to settle for now so I can get aproved.  That charged off card is with Navy Federal and its killing my mortage scores (592 for Equifax 605 for Trans Union and 631 for Experian )  So maybe settling will help me out.  I don't know yet.  Any advice?  Not too sure why I want to go with Navy Federal.  There isn't any real reason as to why.

[VALoanMaster]

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@Joaiwrote:

I have the option to either pay if off completely or settle.  I don't have to go thru Navy federal.  It would leave me with no money if I pay the $5,879 in full.  The Lighthouse rep says to settle for now so I can get aproved.  That charged off card is with Navy Federal and its killing my mortage scores (592 for Equifax 605 for Trans Union and 631 for Experian )  So maybe settling will help me out.  I don't know yet.  Any advice?  Not too sure why I want to go with Navy Federal.  There isn't any real reason as to why.

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Just a heads up, you do not "need" a 620 score to get approved for a VA mortgage but it does help with the rate & approval process.

Here's the deal with charge off accounts. The account itself is a "positive" account with a derogatory status. A collection account is the exact opposite. It's a derogatory account so it doesn't matter it it's paid or not, it will always have a negative effect on your scores.  With a charge off account what you're doing is changing the derogatory "status" of a positive account which is why you can settle for way less than what's owed & still have your scores goes up.

Does that make sense?