Another things that you have to watch out for is not letting your credit report pulled in the mean time - at least 90 days window. Not for a department store, or credit card - not for anything...
Each credit pull, unless you shop for a mortgage company (within a short period of time), reduces your credit score by about 10 points.
If you get your debt (if any) down to 30% of available credit, this will also improve your score.
Once you do that, take care of the larger monthly payment card (this improves your debt to income ratios for a mortgage and makes you more "approvable").
Disputing wrong information is a great thing to do - it could be removed completely, if done the right way - check out the book by Kevin Trudeau "Debt Cures".
Beachfront Realty, Inc.
Next, begin rebuilding your credit. If you have current accounts with good payment histories, or even some previous late-payment-blemishes, make sure you continue to pay those accounts on time. If you do not have any existing credit accounts then you'll need to establish several in order to create a viable credit history.
I have found that CONSUMER ACTION is an excellent resource for objective advice on all things credit related. You'll find free and sincere advice on everything from settling collection accounts to rebuilding credit to building credit from scratch on their website. http://consumer-action.org/
Beware of anyone offering to "repair" your credit! The Federal Trade Commission issued a stern warning last year that such offers are scams. Find more from the FTC HERE. http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm
The best way to buy a home is to have a decent credit history combined with sufficient Income and Assets for a home purchase.
The best way to have a decent credit history is to settle negative outstanding obligations and pay all your bills on time for at least two years.
I can tell you at Coldwell Banker here in the Chicago area we work with PHH Home Loans in our office. They sit down with clients like you and lay out a plan of action to get that score where you need it, and they know their stuff. I am sure you have someone that can help you with that there to get you where you need to be. You are very close. Good luck.
Most lenders can do a VA loan with a 640 credit score and some with even a 620, very few can go below 620. If you get an approve/eligible via automated underwriting, at the time I write this, I could close this loan for you based on your credit score. If you'd like to check into this, shoot me an email/call via my website/profile.