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Want to purchase a home in a year..Bad Credit..Advice?

I recently applied for a mortgage and was denied. My scores were EX614,TU603, and EF617.  I have 2 credcard charged off, 3 private student loans that were in default but now good standing for 3yrs, federal student loan of 30k(27k balance) in good standing, I am authorized user on cc w/16k limit and no balance, no other open accts and no negatives for 3yrs. Report says my debt/credit ratio is 63%(30k/48k).

I have paid $850/mth rent for 2 yrs and $200/mth student loan payment w/ no lates.

I would like to buy a home in the 160k-180k range in a year(or sooner if possible). I have 20k for down payment.
My income is 40k/yr with expected income raise and bonuses to increase income to approx 60k by feb'11.

Any advice on how to raise my scores to achieve this?
Would a secured credit card with low utilization raise scores enough?
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May 18 2010 - Nashville
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Not enough info to give a good answer.  How long ago were the two credit card charge offs?  If they were recent, then just wait a few months and check the scores.   

Dispute the old accounts directly to the credit agencies at their web site annualcreditreport.com.    If you dispute old info, and the creditor does not respond in 30 dasy, then the old information is removed.

I hesitate to suggest opening a new account since tht will lowerer your score until a payment history is established.

Your so close to 620, I would not open a new account.
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May 18 2010
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The charge offs were in 2006. I don' t want to lower my score,but if I opened a new credit card, how long does it typically take to establish a good payment history and raise a score? Will anyone give a loan to someone with a score below 620? 
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May 19 2010
Tune in to Dave Ramsey's radio show (usually 5 days a week on the AM dial) or go to his website.

I fully "buy" his viewpoints on the crass over-use of credit we've been sold in this country and over reaching on home purchases. 

Dave's books, courses, and radio show will help you understand this much better and how to move toward a largely debt-free life.

As a Realtor I would naturally want you to buy a house, but remember that you don't need to be maxed out on your ratios
or other credit.
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May 19 2010
The charge offs are old but they are still reporting?  If so, you should pay them off.  If they are not reporting, then you can leave them alone and your score might be over the 620 mark in several months.  Deending on the amount of the charge off though, you might be required to pay them off for the purchase of the new home. You have sufficient credit at this point and you do not need to open any new accounts.
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May 19 2010

Since the charge offs were over3 years ago I would try to dispute them and use the old " I do not recall"  defense.   After 30 days if the creditors do not respond the items come off.   Most credit card companies will respond with ' we do not have a record form 2006"  then the item comes off.  It's worth a try since it is free and will not lower the score.

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May 19 2010
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Being from Nashville and living less the 10 mins from where Dave Ramsey does his radio show, I am well aware of his views.  I'd like to be able to pay cash for a home, but that just isn't a realistic option for me.
I'm no expert,but I don't believe that a $160k home w/ a $20k down pmt is over-reaching on a $40k/yr (net) income.
I don't want to open a cc to get into more debt. I am asking about this  because I read on this website that having an open cc acct, charging a small amt on it, and paying it off each month was a good way to boost one's credit score.
The charge offs are reporting and are a total of $2000. I can pay these but was afraid it would reduce my score even more and make them report for 7 more yrs. I'm not disputing that i owe this money.
I just want to be able to raise my scores 20pts or so in the next yr. Maybe time alone can accomplish this.
I read that FHA still accepts 580 scores. Is this true? If so Why do lenders only accept 620?  

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May 20 2010
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Great question!  You can achieve your goals. One to One Coaching, Credit Repair and Debt Negotiation that works. www.creditincrisisnow.com
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May 20 2010
I would find a locally owned bank and go talk to a loan officer.  Loan officer's can help you rebuild your credit with smaller loans before you are ready for the big one.  Especially if they know they are going to get a home loan out of the deal a couple of years down the road.  Sometimes they will be willing to offer you small $500-$1000 loans that you can repay over 3 or 4 months.  Hold the money in savings and use the borrowed money to pay back the small loan.  Every time you do that it helps your credit and builds a relationship with that loan officer.  Go inside the bank when the payment is due and pay it inside at a teller.  Stop in and say hi to your loan officer.  Let them get used to seeing you in the bank.  Make your checking and savings deposits inside.  Many times, face time goes a long way in extending credit to new buyers.
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June 21 2010
 
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