Hi this is a great question. You need to find a good lender that will work with you, and help you to qualify to buy your home. It sounds like you are makeing all the right decisions. If you contact me I would be happy to put you in contact with some lenders that can help you.
You are doing the thing that will raise a credit score the quickest and that is paying down debt and more specifically, credit card debt. Do not close the revolving lines but pay them down to under 30% of the credit limits or even better under 10% of the limits. 30% of your credit scores result from balance compared to credit limits on revolving accounts such as credit cards as a percentage. Be careful not to pay off collections until you have spoken to an expert lender. For instance if there is a collection reporting 3 years ago and you pay it off, the most recent activity will show now instead of 3 years ago. Your credit score will have no short term benefit and actually may lower your scores. So paying down the cards is a definite and other than that check with an expert.
FHA loans have new guidelines that start in April that will make the approval process tighter based on credit score & even more on past debt owed. It would be best to speak with a loan officer to discuss your options. I have a list of loan officers here local. Give me a call if you would like to discuss & I would be happy to pass on some contact numbers for you to call.
You can get a loan down to a 580 score with FHA, but the guidelines are very tight. You will have an easier process obviously with a better score. If you look at my page, I actually have the score guidelines on there. If you have any other questions, feel free to give me a call anytime and I will answer them for you. Good luck and God Bless.
I would suggest seeking a credit repair specialist before paying off debt to raise your score. Sometimes, when you pay off old collections it can hurt you more than help. However, to answer your first question, I have lenders that can approve an FHA LOAN at a 600-620 credit score, but there are other factors they look at. Glad to help!!
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