Cleaning up credit report and plans to buy 1st house

[shibabigk]

We might be relocating to California early next year due to DHs job and are cosidering buying a home down there. Nothings for certain yet, but I figured it can't hurt to start thinking about our options now.
We have some credit card debt ($6844), it was a lot more just a few monts ago, before the possible move came up we aggressively reduced our debt. Now, I decided to pay a litle over the minimum and put the rest in savings, seeing that a move will cost us, no point in paying them off if I just need to use them again. If the move does not happen, the money will go on the CC.
We have no money for a down payment, but being active duty we might qualify for a VA loan. We are looking for a small, modest home, the ones I've seen that would be a good fit for us are all below 120,000.
I understand that we might not move, might not qualify for a zero down loan and migh thus not be able to buy a home at all.
Anyway, my DH has made some unwise choices in the past when it comes to credit, so I am trying to see if there is anything we can do to get rid of late payments.
He has a total of four accounts that show late payments (all less than 60 days late, all have been paid)
1st
Car Loan, one late payment in October of 2007, will this one fall off the report come November of 09 since the report shows the last 24 months?

Target Credit Card, one missed payment in March 2008, we've called to have it taken off, no luck. He will try again and maybe speak to a manger. Balance on the card is zero since this month.

2 closed accounts (both Chase CC, I think one was a circuit city card), both were paid off, DH cancelled the cards.
He hasn't called Chase yet, but is it possible to ask them to remove the late payments in exchange for opening a new CC account? No danger of overspening with a new card, I am keeping a close eye on everything and he's learned his lesson ;-) Is that something completely unrealistic, or do companies go for this?

One has three late payments, March, April and October of 2005
one has one late payment June 2007.

Is there anything we can do to get rid of these before we go shopping for a loan? How bad does this look to a lender?

Thanks!

Sorry for typos, my keyboard keeps messing up.

[wincrasher]

You'd be smart to get a copy of your credit score. There are many sites to do this at a low cost.

Your lates are pretty recent. Closing accounts also increases your debt to income ratio - so you are probably getting a big hit from that. I suspect a pretty low FICO.

Honestly, I think the days of 0% down are over unless there is a special program still being extended within the VA system.

I'd question if buying is really the right decision for you. You have debt, no down payment or savings cushion. Plus you are moving around which is common in the service. And you are moving to California - the land of ever declining real estate values. With all the closing costs, you may be just creating a big ol' mess that will take you years to climb out of.

Good Luck.

[boosami]

30-day late remarks do not fall off the credit report for 7 years. Maybe you personally can only see a 2 year history or whatever, but lenders who pull your report will see them for 7 years.

To get late remarks removed, you have to write a letter. You can almost never get them to remove them via phone. It must be in writing.

Write formal letters to the companies reporting the late payments. Explain that you have long-standing accounts with them and love their service (if the accounts are still open). Be honest and say you are working toward repairing your credit to possible purchase a home. Point out your recent good history (and past if available) and ask them if they will consider forgiving them late payment remarks. Thank them for their consideration, and make sure you are ASKING not TELLING them.

After sending the letters, dispute all the remarks with each of the three credit bureau. When they investigate, they will contact the lenders. If you have been forgiven, the remarks will be removed from the credit report.

It is also possible the some or all of the lenders will not respond in time or with the appropriate paperwork to validate the remarks, and they will also be removed. It's worth a try. I've seen plenty of 100% true, valid bad remarks removed because of the lazyness or indifference of creditors.

[terces]

I would be hesitant to buy a home in California until the state becomes more stable.... plus the fact that you are military I assume this isn't going to be your permanent home. Also what area are you looking to move to if you dont' mind me asking.... $120,000 is pretty low for even out there and could be in a bad area of town. I still keep track of the area we lived in CA (moved in 2005) and prices aren't that low.

Take advantage of the military housing (they got some really nice ones depending what area you are moving to) and save save save to fix up your debt. CA is still expensive to live in.

[TheColonel]

shibabigk,

You should be able to dispute all of the items over two years old with each of the credit bureaus that are actually showing the late payments. I have seen other people have good results with doing such.

It's good that you are starting the process now if you plan on purchasing a home in the near future. The VA still allows 100% financing on home purchases and is a great option. I'm sure you could buy a home with a payment that is covered by your monthly housing allowance.

[shibabigk]

Thanks for all the input. We certainly are not trying to make a bad decision.
Not buying a house woul ot leave us devestated at this point, but it would sure be nice.

Credit score is 709 with Experian, mine is 733 (no lates on my report)
The BAH would cover the mortage payment with extra left over to use for utilities and so on.
The base is Vandenberg which apparently has very long wait times to get into on base housing. With two dogs finding a rental is not easy. And those fuzzballs are part of my family and are going wherever we go.
We are looking at Lompoc or Santa Maria.
I don't feel that renting is a waste of money, but seeing that our income would not decrease by having a house payment, it is tempting.
With BAH, take home pay would not change since we can use the housing allowance to pay for the mortage.
Lots to think about.

[terces]

Make sure you are including all the costs of homeownership to your BAH... taxes, homeowners insurance, upkeep, etc. Don't they say you figure in an additional 25% when comparing buying to renting. Plus you have to be prepared that you could get stuck with this house should you have to move in the future and have no buyer.

VA financing is a great option.... we took advantage of it when purchasing our first home. But boy are they picky... they do their own walk through approval/appraisal of the house.