Oh yea, we found a home we actually love and are racing against the clock. This will be 6+ months of the active home buying search rollercoaster and we finally found another home we love...only to hit this roadblock.
Any helpful guidance is appreciated and I'm happy to help fill in any blanks I may have ommitted. The middle score is about 10 points above the threshold, so I'm hoping it won't dip much more.
Collections are not removed from scoring based on filing of a dispute.
A collection is not a tradeline of the consumer, it is the reporting of attempts by a third party to collect on a delinquent debt.
It is only certain information reported under tradelines that are temporarily excluded from scoring during the period of a pending dispute.
Open collections will be a problem with mortgages, even if there is an active dispute.
This is because the collection agency can potentially sue and win a judgement, worst case scenario including lawyers fees, and that judgement can be forcibly enforced throwing your whole financial picture into disarray.
I'm not saying that no mortgage company will work with you with open collections, but at the very least you will be limited.
If the collections are paid, and the tradelines are not currently being disputed, the FICO score showing on myfico will likely be the one your mortgage lender will see. There are caveats.
I would suggest working with a mortgage broker. They sometimes have deals that are hard for the general public to find, and if they are active, they have a feel for what credit profiles will be successful with which lenders. On one house purchase, we worked with a broker who gave us a lead to a mortgage company, but then that broker turned out to be a worthless schmuck so we went to that company directly. The bank had us write a letter explaining why we would not work with that mortgage broker (he cost us time and money unnecessarily, and we almost lost the opportunity to buy the house we wanted), and ended up giving us a deal that was either the same or slightly better and he lost out on the commission. Just trying to make the point that _if_ a mortgage broker turns out bad, you aren't stuck. I did buy one other home, with a mortgage broker involved, and that mortgage turned out to be a better deal than we would have found on our own.
Our real estate agent recommended the broker that was good. The home builder recommended the one that was bad.