Improving credit to qualify for USDA or FHA loan

Improving credit to qualify for USDA or FHA loanImproving credit to qualify for USDA or FHA loan
DavidEthix asked 5 years ago

I’m 27 years old and currently renting in the Raleigh area. I’m paying $ 1000/month to rent a nice one bedroom apartment, but I just got a large promotion and I’m essentially sick of paying rent. My current lease runs until the middle of January, and I’m hoping by then I can be ready to purchase a house. The only problem being, I have poor credit. I had quite a bit of student loan debt that I was unable to pay when I left college, as well as a large sum of medical bills. My score currently sits around 580. I signed up for MyFico today, as I’m trying to determine what I can do to get my scores up significantly enough to purchase my first home in January when the lease expires. I have three revolving accounts that show on my report. One is a BoA credit card opened in Oct. 2013, another is a Capital One credit card opened in May of 2014, and the other is a Capital One credit card opened in April of 2007. The first two are low limit cards, in good standing. The one from 2007 was my freshman year of college, and I did not handle it responsibly. It had a $ 500 limit, and I ended up using it and making payments as I should in the beginning, and then maxing it out and not paying it when I had shoulder surgery in 2008. It shows my “last activity” on my report on the card as June of 2009. It also shows a $ 1900 balance. The payment timeline only goes back to Sept. of 2013, but it shows charged off there. It reports every month as charged off since then through this month, and Account Closed At Credit Grantor’s Request. 

 

I have a lot of installment accounts from the student loans, but only two that have reported within the last couple of years. One of them is being paid as agreed and in good standing. The other I actually thought was part of the one I am paying on, and has been reporting negatively as charged off since at least 8/2013. That was a US Dept of Ed loan, and the balance only shows as $ 404. I will be looking into that. 

 

Basically I’m trying to determine my best courses of action to get my score up quickly. I’m not sure if I should contact Capital One and try to negotiate a settlement with them, to see if they could delete that account from credit report. As stated, the original credit limit was only $ 500.00, the rest is late fees and such. Also I need to figure out the $ 400 Dept of Ed loan. Those seem to be the two items still currently reporting negatively on me on a monthly basis. Would my score drastically increase if I could get these taken care of? I do know that I need to get my two credit cards down to very small amounts and keep them that way. That should be taken care of in the next month or so, and they will stay that way. Any advice that could be given would be greatly appreciated. I’m just hoping to make my first home a reality. Thanks for reading!

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