Let's start with the Facts: As of March 6th, 2009 it is now required for you to have a 620 fico score to qualify for both FHA and VA financing which are generally the most widely used programs for borrowers with less than perfect credit. There may be other financing you can find in the private money (hard money) sector but those options will typically require large down payments of 30% - 50% or more.
That being said, don't be defeated. Credit scores are mostly indicators of how you have performed with your credit in the recent history (24 months). I have helped clients focus on improving their scores from where you are at now to the low 700's in less than 24 months.
First bit of advice is go to http://www.annualcreditreport.com
and get a copy of your report for free. Once you have your report, highlight all the collections and pay those off first. Be sure to get something from the collection company in writing that you have paid it just in case it doesn't get automatically removed from your report. Lastly begin paying down your installment debt (credit cards). If you focus on these basic steps over the next 2 years you will find your scores easily within the required range, but also you will get better interest rates as a result of the new higher scores and definitely qualify for more home because your debt load will be lighter.
For more basic mortgage information or to contact me directly, please visit me at http://www.campbellsd.com.
Clarion Mortgage Capital, Inc.