Almost out of debt-wanting to buy a home.

[mamahearts]

Eight years ago I had an unexpected, unplanned for, emergency surgery.  It wiped us out and we had alot of the medical bills go to collections. We really want to be able to buy a house next year.  Our daughter is 3 and we want her to have a yard to play in, her own bedroom, we'd like to be able to hang up pictures on the walls.  You know, it feels like we've had our lives on hold all this time.   We've been married for 11 years and live in an apt we can afford, we don't have a car payment, we just work and pay bills.  And feel like we just really need to have our own home and our money invested in our future not at a standstill, not stuck in the past. 

One by one, line by line, we've paid off our medical bills and 1 judgement.  These all show on our report as paid in full and the judgement was satisfied.  How long before those stop effecting our score?   We only have about $1000 left in medical bills, 2 credit cards ($700 and $500 lines of credit not even close to maxed out), student loans in the neighborhood of $5000 and just our regular monthly expenses (rent, utilities, car insurance, preschool tuition). We checked our credit in 2006 and were in the 560 range, when we decided to really kick it in gear.  Last time we checked was about a year ago and we were about 640.  

My husband's company is being bought out and this should be finalized in May.   We have dedicated our income to paying off those debts but we haven't been able to save for a down payment. He was told today that when the takeover happens he will get paid out his 401K and we are interested in using some of that money as our downpayment along with our tax return.  We're also going to need to buy a car in the next year but like before we don't want car payments, so we intend to pay with cash.

Bad idea? Good idea?  Should we dispute the paid in full debts from our report or leave them alone until they fall off on their own?  Thanks for your advice!

[mamahearts]

One by one, line by line, we've paid off our medical bills and 1 judgement.  These all show on our report as paid in full and the judgement was satisfied.  How long before those stop effecting our score?   We only have about $1000 left in medical bills, 2 credit cards ($700 and $500 lines of credit not even close to maxed out), student loans in the neighborhood of $5000 and just our regular monthly expenses (rent, utilities, car insurance, preschool tuition). We checked our credit in 2006 and were in the 560 range, when we decided to really kick it in gear.  Last time we checked was about a year ago and we were about 640.  

My husband's company is being bought out and this should be finalized in May.   We have dedicated our income to paying off those debts but we haven't been able to save for a down payment. He was told today that when the takeover happens he will get paid out his 401K and we are interested in using some of that money as our downpayment along with our tax return.  We're also going to need to buy a car in the next year but like before we don't want car payments, so we intend to pay with cash.

Bad idea? Good idea?  Should we dispute the paid in full debts from our report or leave them alone until they fall off on their own?  Thanks for your advice!

[MarineVietVet]

Locking this thread to direct readers to an identical post here: http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/Almost-out-of-debt-wanting-to-buy-a-home/td-p...