It's time that you and your mate took active steps to clean up your credit file so it correctly shows the bills you've paid off. If you haven't already done so, complete the "request for reinvestigation" form that's included with your credit report, or write a letter to the credit bureau listing and requesting removal or reinvestigation of the incorrect and old information.

If the bureau doesn't respond within 30 days, send a follow-up letter requesting that it remove the disputed information. If the bureau claims the information is accurate, contact the creditors directly. If a creditor agrees that the bills are paid off, get it in writing. Then, send this letter to the credit bureau. Or, provide the name and phone number of the creditor to the bureau so it can call and verify the information. If the creditor won't assist you, call the credit bureau customer service number and ask for help. Once your file is current, try again to prequalify for a mortgage.

Because you're dealing with a number of complications, it would probably be best for you to work with a mortgage broker. You may be able to find a mortgage for which you can qualify, but don't bank on finding the best terms -- you will probably need to make a 20% to 25% down payment, pay high points, pay higher than average interest, or even get a cosigner.