Looking to build a home soon, seeking help on getting approved.

[Clue]

I'm working towards building a house. I am wondering what my best course of action is; below I have listed my current situation and my credit history/report. I'm looking for information on if I can get approved...if not, what should i work on to get there. Also, whats my best options for building my first home.

 

I apologize in advance if i'm breaking any rules and i'm not entirely sure if this post is more appropriate for the credit forum or this one. I just found these boards last night, and its appears to be a really great resource. Appreciate any help I can get, I will be searching more information on these boards.

 

Thanks

 

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I have around $50k saved so far. Soon I will own 2-4 acres in an area with fairly high land prices, though i'm not entirely sure what the land will appraise for.

 

The issue is that I have a poor credit report. As of this morning, i paid to see my score on experian and it was 589.

 

I paid off all my debt in February of this year.

 

3 Collections

 

$389, paid

 

$157, paid

 

$253, paid

 

1 secured loan.

 

I put 14k in cash in a CD at 8% interest to pay off my debt and i currently pay $596 per month at 3.5% interest for 2 years from February, all payments on time. Balance is around $10,800 currently. (I was told by my bank that this would help rebuild my credit).

 

4 student loans:

 

USA Funds -$472 - Shows paid collection

 

Sallie Mae - $2625 - Shows 120+ days late with a balance of $0 and [Claim filed with Government, Balance paid by Insurance] - I paid this off through a collection agency in February

 

Natl Coleg - $2032 - Shows 120+ days late with a balance of $0 and [Transfered to Recovery/Claim filed with Government] - I paid this off through a collection agency in February

 

Natl Coleg - $2673 - Shows 120+ days late with a balance of $0 and [Transfered to Recovery/Claim filed with Government] - I paid this off through a collection agency in February

 

Other accounts

 

$6000 - Balance of $0 - Pays acct as agreed [Account closed at consumers request] - I don't remember what kind of account this was

 

$4300 - Balance of $0 - Pays acct as agreed [Account paid] - lists as credit card

 

$20561 - Balance of $0 - Pays acct as agreed [Account paid] - This was an auto loan

 

$2570 - Balance of $0 - Shows [Charged off account] This account isn't mine and was opened in 1996, which would have made me 11 at the time. It was charged off in $2007 I believe.

 

[road2freedom]

For the paid collections, those won't really hinder your ability to qualify but they are affecting your scores. I would work on disputing those off. If you check the main forums you'll get more detail on how to proceed. This applies to the student loans as well. If you can't get them removed it may affect how soon you can qualify for various mortgage programs.

 

The secured loan is fine - but could affect your DTI which determines what you can afford according to underwriting. Depending on your income and other debts, you may need to pay that off before you jump into a mortgage. Do a quick search on DTI / Debt to Income / Back End Ratio or we can walk you through it.

 

For the "not mine" dispute it and it should go away. If it doesn't you may have to contact the OC and point out that they are incorrect and impacting your ability to qualify for credit.

 

Good job on the pay as agreed lines - keep it up. When you dispute items off it can sometime drop your score because you are losing average account age. I'm of the opinion that I'd prefer a shorter account range than having baddies linger, but don't be surprised if an old charge off goes away and your score doesn't budge or the change is minimal.

 

If you have a bit of time before you intent to apply, you may want to work on adding another account or two just to get some additional positive history going. You can do a secured credit card or two immediately or wait until those scores increase a bit and apply for an unsecured card.

[Clue]

Thank you,

 

Really appreciate the help, this gives me some good info on where to go from here. I will check the main boards.

 

As for the secured loan; I just checked, the balance is $10,275. I could easily pay this off if it would improve my chances. I earn 60k a year, with some overtime (have 400 hours since march, will be less next year). This loan is my only debt shown on my credit report. I would like to get the process started for building a home this year, if possible. If not, I will just work on my credit issues.

 

It is my understanding that with a secured card; I will have to put up collateral for the credit limit. This is no problem. Do you have any suggestions, or links to posts here, on the best cards to apply for?

[Brian B The Loan Professor]

Construction loans are very difficult to find they have gone away since the melt down - You may have some luck finding it through a local bank

It may be easier to find a builder and have them build and then you buy from the builder when complete - this is common but not sure how it would work with you already owning the land -

If you do find a construction loan expect that the guidelines will be tight and your credit will need to be solid when you apply

B