Things may have changed since the financial crisis, or maybe it’s the area that I’m in, but the minimum credit score required for a loan had to be at least 640, when we asked in December. They go by the median scores of whoever is buying the house- say my scores are 560, 620, and 660, they’d use 620 and I would not qualify.
If you want to buy a house in the next couple of years, take some steps to get your credit back up. Utilities and rent do not report on your credit, unless you make late payments. Pay them every month in full on time? Great, but it doesn’t help your credit. Make a late payment? BAM! On your credit report. It sounds like you have hospital bills negatively reporting and utilities negatively reporting- in order to combat these, you need to get something positively reporting on there.
Your credit may or may not be good enough to qualify for a credit card, if it’s not, get a secured card. Charge on it every month (less than 20% of the credit limit) and pay it off in full, every month. If you’re planning on going to school, take advantage of federal student loans- not in excess, but get a couple. If you have someone (a parent, SO, etc) that has good credit and pays their bills on time reliably, ask to be put on a card of theirs as an authorized user (even if you’re not using it.)
What they’re looking for is a few sources of credit that positively report for you. If you have a million credit cards and they’re all paid off in full and you don’t use them anymore, it looks bad because they’re not positively reporting for you AND you have the ability to charge a gazillion dollars and owe a ton of money overnight, if you so choose. If you have $30,000 in student loans but no other credit, they wonder why you don’t have any other credit. If you have a huge car payment and some combination of other credit, they’re mad at you for having too much credit, again.
It’s a delicate balance.
There are certain loans that give you more leeway on the credit issue. I have excellent credit, my FI has no credit (literally, no score). We are able to qualify for an FHA loan, because of my credit. In lieu of a credit score for him, they are considering other credit sources like our television bills, utility bills, and car insurance. But, that’s only because my credit is vouching for us, so to speak.
VA loans also have much more relaxed guidelines.