A debt settlement program will likely damage your credit score, making it quite hard for you to find a good deal on a home loan. Data from the Federal Housing Administration says you can only qualify for a loan with a 3.5% down payment if you have a FICO credit score of at least 580. If not, the down payment will be 10%, which is why it’s important to start rebuilding your credit score before you can become eligible for a better deal.
Luckily, there are quite a few ways you can improve your rating, but it will probably take months or even years to do so. One of the commonly used methods to build up a good credit score is to make small credit card purchases and pay the balance in full as soon you receive the billing statement. You should also consider switching to cash purchases, as well as saving up cash for the down payment, so you don’t have to borrow as much for your home loan. Finally, if you have any other active debts, paying them off will go a long way toward improving your credit score.