To begin improving your credit score, you would need to contact each of your creditors directly to see what your options are. Paying off derogatory debt will help improve your credit score in the long run, but not immediately.
With collection accounts, most of the damage is done when they are initially placed on your credit report. Some collection companies are now reporting you are late each month the debt goes unpaid. This continues to drag on many peopleâ€™s credit scores each month until the debt is paid in full. Until you do that, your credit score has little chance of improving.
In exchange for paying the collection account in full, you can try to negotiate to have them completely remove the derogatory item once the payment is received. Some collection agencies will do this, while others will not. You will just have to ask each one and see. If they will not remove it, just having it paid and closed will help in the long run.
All liens and judgments will also need to be paid in full. These impact the title position of a mortgage so they must be satisfied.
It is very important that you be VERY careful in disputing accounts. You cannot dispute accounts which you know to be accurate. For a mortgage, you cannot have an active and open account that has a disputed status. Fannie Mae/Freddie Mac/HUD all have very specific guidelines to be followed when a borrower has an account in a disputed status. In some cases, it could cause you not to be able to qualify.
To build positive credit, you typically need to have 2-3 trade lines reporting for 12-24 months. There should be no late payments or other derogatory items reported in the last 12-24 months. On your Revolving credit accounts, your outstanding balance on your monthly statement should not exceed 30% of the credit limit.... more
First, thanks for your response. What % down payment are tier or bonus VA entitlement loans normally?
You're welcome. The down payment completely depends on the situation.
For example: Lets use the numbers from my first answer.
With available entitlement of $66,750 the maximum new loan amount available without a down payment would be $267,000. Let's say you want to buy a home with a purchase price of $300,000. We would need to calculate the required "coverage" for a $300,000 loan so we would multiple it by 25%. $300,000 X 25% = $75,000. This means you would need $75,000 in entitlement for a $300,000 mortgage without a down payment. A lot of people will make the mistake of thinking they would need a down payment of $300,000 - $267,000 ($33,000) but that's not how it works. You would actually subtract the amount of entitlement you have available from the amount of entitlement you need to determine how much of a down payment you need. $75,000 - $66,750 = $8,250.00.
Senior Mortgage Banker
Peoples Bank & Trust Co.
My suggestion would be to get yourself into a rental, live there for a few months, then if you really like the place make an offer to purchase to the owner. On a rent to own you most likely will not have your rent going towards the purchase in any substantial way. The money you will save by negotiating later will be more than made up! Rent to own or owner financing is almost always slanted towards the seller.... more