It might be. Or it might not be.
Sorry for the ambiguous answer.
I'm a big advocate of lease-options/rent-to-owns. But the conditions have to be right.
Based on the points raised in your question, the answer really depends on whether you're able to clean your credit it up and how long it'll take. For some guidance on that, see a mortgage broker. Get some idea of what's showing up on your credit report and a realistic idea of how long it can take to correct. The next question, logically, is: Can you do it? Are you prepared to take the steps needed to clean up your credit? Remember: At the end of a lease-option, you're going to be going out and getting a conventional mortgage. So, at that point, you'll need good credit.
A few general tips: The lease-option should be for a minimum of 2 years. Perhaps more, if it'll take longer to clean up your credit. (If the mortgage broker estimates 2 years, then go for an option of at least 3 years. You need to build in some extra time both as a security measure and to make sure that the steps you've taken ripple through to your credit report.)
You want an agent familiar with creative financing. Probably one who works with investors--not that you're an investor, but you want an agent who's flexible, open-minded, and creative.
Also, make sure that a lawyer reviews all the documents. Again, you want one who's used to working with investors. There are plenty of so-called real estate lawyers out there who don't know the first thing about lease-options and rent-to-owns. And there are plenty of ways a lawyer can protect you. For instance: (1) By including a clause allowing the extension of the option for an additional year upon payment of a fee from you; (2) By including a clause specifying what happens if the property fails to appraise for the value specified in the option (a number of possibilities there, from reducing the sales price to the appraisal price to extending the option period, and more); (3) By including a clause that will allow you to determine whether the seller is making his mortgage payments on time (you don't want the property you're planning on buying to go into foreclosure), and more.
Start by calling real estate companies in the area you hope to buy. Speak to the agency's broker. Explain what you hope to do. Say that you've been advised (by me) that it's likely that an investor-friendly agent may be best prepared to assist you; what does he think? You'll find that opinions vary widely on rent-to-owns. You may run into a broker who says that he doesn't let his agents do those deals at all. Some don't. That's fine. Just call the next agency on your list.
Finally, here's a link to a blog I wrote on how to find rent-to-own homes. It may be useful to you or to whichever agent you select: http://bit.ly/findaleaseoption
Hope that helps.