There are many different types of mortgages that you will be able to get without perfect credit. Some programs use the credit score only, only the mortgage history, and some will even disregard collections and judgments allowing them to exist without having to pay them off.

Fha loans offer a great rate to those who have some credit blemishes. You will be required to write a letter of explanation to explain why you were past due and may be required to pay off any collections to qualify.

Have your credit scores changed drastically recently? If you had low credit scores a few years ago, but have since worked on paying down high balance credit cards, paying off collections, or if you have a bankruptcy that has been discharged, then you may be in a situation where refinancing will save you a lot of money.

Some creditors are very good at reporting negative information, but not so good at reporting positive information. For example, they may have reported your account as being in collections, but not report when it is paid. By federal law, you are entitled to get one free report each year from each of the three credit bureaus. Get yours and review them annually.

Not only are late payments going to have a huge negative affect on your credit but recent late payments with amounts listed in the past due column of your credit report are going to affect your credit scores even worse. Whenever there is an amount listed in the past due column it will have an even worse affect on your credit score. Therefore, if you have collection accounts with past due amounts listed on your credit report these will affect your credit even worse than collections without a number listed in the past due column. Please consult your mortgage broker for more information.

If you decide to pay off any old collections you can try to negotiate with the debt collector. Sometimes they will settle for a lower amount and possibly remove the derogatory account from your credit report all together. The best route is to attempt to have the account removed rather than updated as paid. If your debt collector offers such a service, be sure to get the agreement in writing prior to paying on any account. Be sure to keep all receipts from paid collection accounts in case there is a problem later on. Thirty to sixty days after the account is paid you should check your credit report again to verify the proper action was taken.

If you have any collections reported on your credit report that are several years old, consider not to pay them off. Paying off a collection can update that account, making it current which can bring down your scores. The older the derogatory items on your report are, the less of a negative impact it is on your report.

If you are trying to save your home and need to work out a payment plan to get your mortgage current with your lender you will most times need to talk to the loss mitigation department. This may take a little effort since most calls will be routed to the collections department who normally will just demand you pay or else.

Your payment history accounts for the highest percentage of your credit report, approximately 35% of your total score. Therefore, if the maximum credit score possible is 850 points, 35% of this would be approximately 300 points. So if you have a perfect credit history and you have never had any late payments, collections, charge-offs or judgments, you should roughly have around 300 points just for paying your bills on time.

You should check your credit report three to six months after the bankruptcy discharge and make sure the discharged accounts are being reported as discharged in bankruptcy. Oftentimes, creditors report the discharged accounts as charge off, collections, open unpaid or other such ways which will have a more detrimental effect on your credit score. It is very important that you keep all bankruptcy papers, especially the list of discharged creditors.