We are actually in a somewhat similar situation. We were planning to buy in Spring, 2012, but 2 months ago stumbled across an awesome opportunity to start building a home immediately. However, my credit score needed some work. Our house will take 8 months to build (finished Feb 2012) and by then, my score would be in much better shape and fine for closing, but we had to get a pre-approval from a lender in order to sign the purchase agreement and break ground on our home.
My husband's credit scores are in the high 700s, so he looks great on paper, but he's a teacher with a very low salary. I make a little over $100K, but had a few SLs default a few years back (high balances, I make monthly payments, but they are still unpaid) and therefore, my credit scores were struggling. Luckily, I had already started the credit repair journey last year, so my scores had already started to increase when we came across the building opportunity.
While lenders will take into your ablity to improve your scores, finances, etc prior to closing, it's highly likely that they'll still want to see that you're technically qualifiable right now, otherwsie, they won't provide you with a pre-approval letter. If you're border-line, they may even add in conditions (e.g. score must be X, must pay off X). In that case, you'd need to check with the builder to see if a pre-approval with conditions is acceptable for their purposes (our builder said it was fine).
In the last 60 days, we have busted our butts to get my scores above the 620 mark for pre-approval. I can tell you, the absolute quickest way to get your scores up is to pay your revolving debt down. Both you and your husband need to get your scores up in order to get pre-qualified - 640 is ideal, but 620 is probably do-able. I would go ahead and start talking to a LO and find out their score requirements, etc.
Regarding whether you should be included on the loan, you didn't give a ton of information, but DTI is calculated by combining the income and debt of all applicants and based on what you've said, I don't think your income and debts will tip the scale that much (alone they may look bad, but your husband's income is high with little debt). Again, I suggest speaking with a loan officer and determining two things: 1) is your DTI acceptable with both you and your husband on the loan (if it is, there's no reason not to include you - I wouldn't want my spouse to buy a home without me!) and 2) if the DTI is a problem with both of you, can your husband qualify with his income alone.
If you can start paying down the revolving debt, be strategic. Utilization is scored both individually (each account's util %) and by combining all revolving together (overall util %). Therefore, I would start by paying OFF the smallest revolving debts you have a working up from there. The more $0 balances, the better, but ultimately, the overall util % is the most important. Do you know where your overall util % sits now?? With scores hovering around 600 and high util %s, I think it's very likely that your scores will increase to over 640 by paying down revolving debt, especially if it gets it under 50%. Great that all of your revolving is joint - kills 2 birds with 1 stone!
Mid-2010 Starting Scores: FAKO EQ 476 FAKO EX 506 FICO TU98 575
July 2017 Current Scores: Approx 710 (waiting for official updates)
