Pre-qualifying for mortgage

[Matthyl]

Good evening.

I'm trying to prequalify for a mortgage. My scores ranges from 582-688 (I don't know why there is such a discrepency). My credit utilization is 6%. I also have two medical collection accounts from 6 years ago, totaling $1355. The broker says that I need to increase my middle score 30 points, to 640, and paying the collections wil do this. Is this true? I'm not sure what else to do. Thanks for any assistance. 

[NC_Mtg_Loaner]

get copies of all three credit reports to compare and see what the discrepancies are.   Something tells me either the low score is going to change (adjust) or the high score will.   Any idea which?

Contacting anyone about collections 6 years old that are going to fall off your report in another year or less seems silly to me at this point as you might bring them current which doesn't help you at all--especially since they are medical collections which FHA doesn't care about in the first place.

Of course there might be more to all of this....

[Matthyl]

Thanks for the response.

About 2 months ago I paid off all my credit cards. I have a credit utilization of 6% and a DTI of 27%. When I paid off the credit cards, I saw the scores rise on the credit monitoring sites: Experian.com; quizzle.com; creditkarma.com (I know this one is absolutely rubbish!) and the score monitoring with my credit cards (Discover, Capitalone).

I'm hoping there is nothing else to it, but I will know more when I get the credit reports.

Thanks again. This forum has been extremely helpful.

[NC_Mtg_Loaner]

What I meant when I said there's more to it was that your credit score and history is just the preliminary qualifier....

Your income needs to sufficient, employment stable (if applicable), proof of funds for down payment and closing costs, DTI acceptable for guidelines and program and the property needs to be sufficient colatteral for your loan.  We're merely assuming this is in line with expectations.

[Matthyl]

I see!

Well, the broker said that my income was sufficient. I will be receiving downpayments assistance from the county, through a first-time homebuyers program. I've been employed for 15 years with the same employer. But again, I'm only in the prequalifying stages. 

Thanks again! 

[Anonymous]

Matthyl, are you prequalified or preapproved?

[Matthyl]

Just started the process to becoming pre-qualified. 

[Anonymous]

Sounds like you have lender overlays here. FHA lenders allow you to go down to 580 with 3.5% down.

Paying the medical bill that old will probably not increase the score 30 points. On something that old, it will probaly actually lower it. 

Protest the collection instead.

[NC_Mtg_Loaner]

How many accounts do you have that are open and actively reporting to all three bureaus?

(Sorry, I can't believe I didn't ask this question in the first place.....)