Late utility payment on credit. Will FHA/mshda deny me? HELP!

[jbishop1001]

I previously posted in "rebuildling credit" but got no response. I have a DTE bill that has been on my credit report for 5 years. I have had several late payments show up but as of recently the bill got paid down to $0. I am awaiting my next bill and will pay in full. But will late payments on my report get me denied for an FHA mortgage? I know it affects my score, but I am working on that. Here is some background: 

I am currently working on rebuilding my credit score before trying to obtain a mshda (down payment assistance) loan on top of an fha loan. My scores are 549/569/588 (exp, eqf, trans) I have an "open installment" (aka dte, utility) on exp & eqf which recently had a past due of 120 days with a balance of $570. My balance is now $0. I contacted DTE and they denied to remove any negative information because I have had several late payments over the course of 5 years. (On average, 2 per year)

I have 3 open collections on one report (the same collections show as closed on the other 2 reports). The oc was medical but went to an agency. It is over 5 years old and each collection is under $300. Actually, the total is $797. I have only 1 collection on trans and it is for a $98 library fine. 4 years old. I have disputed in the past and do not intend to settle as long as these will not affect me being approved for my mortgage.

I also just received the OpenSky secured card with a deposit if $200. I intend only to use $60 (30%) for my internet bill and pay in full each month. How soon will I be ready to apply? I plan on paying $50 for the homeowner education certificate required for mshda. Please help!! I need to have a 620-640 asap! I have no judgements or bankruptcy. Late payments are what have killed my score but I'm hoping my $0 balance will get me some deletions. I have read others have had success with dte so I'm hopeful.

After everything falls into place who do I contact first? A mortgage lender? Do they apply for mshda or do I do that first? First time homebuyer in Michigan. 4 years verifiable income & 3 years rental history at same address. 

Also, DTE account more than 3 years old. Avg. age of accounts is more than 4 years. I know old accounts are good as well as mixed credit which is why I got the OpenSky card. It seems like all these things happening simultaneously will make my score higher sooner.  Am I wrong? Is there any hope for me in the next 6 months?

[#2]

I am currently working on rebuilding my credit score before trying to obtain a mshda (down payment assistance) loan on top of an fha loan. My scores are 549/569/588 (exp, eqf, trans) I have an "open installment" (aka dte, utility) on exp & eqf which recently had a past due of 120 days with a balance of $570. My balance is now $0. I contacted DTE and they denied to remove any negative information because I have had several late payments over the course of 5 years. (On average, 2 per year)

I have 3 open collections on one report (the same collections show as closed on the other 2 reports). The oc was medical but went to an agency. It is over 5 years old and each collection is under $300. Actually, the total is $797. I have only 1 collection on trans and it is for a $98 library fine. 4 years old. I have disputed in the past and do not intend to settle as long as these will not affect me being approved for my mortgage.

I also just received the OpenSky secured card with a deposit if $200. I intend only to use $60 (30%) for my internet bill and pay in full each month. How soon will I be ready to apply? I plan on paying $50 for the homeowner education certificate required for mshda. Please help!! I need to have a 620-640 asap! I have no judgements or bankruptcy. Late payments are what have killed my score but I'm hoping my $0 balance will get me some deletions. I have read others have had success with dte so I'm hopeful.

After everything falls into place who do I contact first? A mortgage lender? Do they apply for mshda or do I do that first? First time homebuyer in Michigan. 4 years verifiable income & 3 years rental history at same address. 

[#3]

Also, DTE account more than 3 years old. Avg. age of accounts is more than 4 years. I know old accounts are good as well as mixed credit which is why I got the OpenSky card. It seems like all these things happening simultaneously will make my score higher sooner.  Am I wrong? Is there any hope for me in the next 6 months?

[VirtualCuriosity]

For what it's worth -   If you had an otherwise clean history with DTE, I bet you can have them remove the lates.  I tried with GW with letters three separate times with no success.  I finally called and got a rep. that didn't even sound real pleasant, but after an honest conversation, she removed them.  I had a clean account with them for about 16ish years at the time and then had like 5- 60 day lates in a row during a real rough period years ago (plus I never knew then that they reported to the CRAs). 

[jbishop1001]

No, not such a clean history with DTE. I've defaulted on a couple of shutoff protection plans which have averaged me about 2 lates per year. The most recent being 2 consecutive 120 lates. But the balance is paid in full. I am just hoping that is enough to get the lender to look the other way on the late payments.

[los_west]

I am new to mortgages, but from what I have learned, lenders don't like open collections and late payments within the last 12 months.   They want to see several active and current tradelines that are in good standing without late payments.