Help me map out a rebuilding plan

Question

In early 2013 my husband and I decided we wanted to start looking into home ownership so we met with a lender and started working on their plan for us. We paid off a ton of debt and both had credit scores in the mid to high 600s.
Then he got accepted to PA school, and our income was cut in half. We got behind on bills, he paid our cr payment late most of 2014, and of course scores dropped. We actually just went through a divorce too. Now I am a single mom of two kids and I want to rebuild my credit.
I had nothing positive on my report to help me, so I did just apply for an auto loan. Approved at 8.74% with a credit score of 550 with a local bank. I was thrilled with that, but now I need to tackle the rest.
I've been using Lexington Law for about three months. My credit score is about 40 points higher since I started. They charge $100/month. Is it worthwhile to continue with them, or can I go this on my own?
My ultimate goal is to be able to purchase a 3-4 bedroom home within the next two years. Is it doable? What do I need to do? Do you suggest meeting with a lender now to find out what I need to do?
I know I can likely qualify before two years but I am not sure where I want to buy yet. My ex husband still has 5 months until graduation and after that will work here for another year before we all end up moving elsewhere in the country. So I say two years because that is likely when I will know where I am headed.
Plusses: right now 8 years at my job, many past satisfied auto loans and other accounts, "a story for what disturbed my credit", current student loans.
Negatives/baddies: mainly medical collections. The auto loan I was on with him he just closed out and opened a new one. I have more inquiries right now due to my own new auto loan. So new credit. A few chargeoffs from sometime in the fall. A few settled/paid less than full balance accounts.
I currently make $33K. I also get (will get) $2500/month from him for child support & maintenance.
Any advice is appreciated.

Answer 1

Hi there, and welcome to the forum. Firstly, credit repair services are almost never worth it. I'm sure some here may disagree but I don't see any benefit to them at all. There is nothing they can do for you (legally) that you cannot do yourself. That extra $100 a month could be going towards your outstanding debt. The first thing I would recommend is putting together a small emergency fund of at least $1000. Second, I'd recommend getting a secured credit card to help re-establish good payment habits. Keep the limit modest to keep you from going overboard with impulse buys. Take a second look at that credit report to ensure all the baddies are validly yours. Dispute anything that looks weird. If your goal is to pull the trigger on a house in two years, I would recommend putting together a house fund and placing a percentage of your income in there every paycheck. Investing in a mutual fund/index fund or good exchange-traded fund that pays dividends may also be a good idea. The bigger down payment you can place on the home, the better your odds. Two years from now you can easily be in the high 600s or better and your required down payment before lenders will consider you will start to slowly come down. But don't be tempted by that. In your situation, anything less than than a 10% down payment is asking for a world of hurt. Oh, and just out of curiosity, why does your ex-husband's plans matter if you two are divorced? I hope this helped and good luck to you.