How to Get a Mortgage With Charge-Offs
Charge-offs and other negative credit marks lower your credit score, a number used by mortgage lenders when they are determining your eligibility for a mortgage. Having charge-offs on your report does not automatically disqualify you from receiving a mortgage loan. In some cases, the charge-off will not have any large effect on your score. In other cases, the charge-off might put your credit score below what the lender is willing to accept.
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Instructions
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Check your credit score and report by purchasing a credit score at MyFICO.com, the purveyor for the most commonly used credit score. The credit score also comes with a report, so you can see the amount of the charge-offs and how long ago they occurred. If the charge-off is over 2 years old, its impact is not as great on your report. More recent charge-offs may make your lender shy away from offering you a mortgage.
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Call the original creditors or the collection agency that held the bad accounts if you have the money to pay the debt back. Ask if the company would be open to a pay-for-delete arrangement, where you pay the debt or a negotiated price for the debt and the creditor removes the account from your report. Otherwise, pay the debt. The charge-off will be updated with a paid status on your credit report, which will look better than an unpaid debt during a review by your lender.
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Talk with your lender about what he does and does not accept when it comes to charge-offs and other bad credit marks. The bank might have a bad credit mortgage option or you can pursue a program such as the Federal Housing Authority mortgage loan products, which have less stringent credit restrictions.
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