What does a loan officer look for when looking at your credit?

My hubby and I are going to apply for a home mortgage at a few places next week. This is going to be our first house.

We dont have the best credit (stupid mistakes as teenagers). We only have about $ 4000 of debt. We are worried this is going to affect our ability to get a mortgage. Both our cars are payed off and this is the only real debt we have.

We do have a few things going for us. Over $ 20000 in 401k (which we wont touch for anything!). We have $ 20000 for a down payment and my hubby has been with his job now for 8 years.

Is this going to effect our interest rates greatly? I dont want to pay off my credit bills with my down payment because I want to make sure I have enough for the down payment. Is there any way to combine the two so we can use part of the down payment to pay off our existing bills?

Just curious what this guy is going to be looking for.

Thanks.

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