CREDIT DISPUTES
How many of us have ever gotten a credit report online? Have you ever seen something on your credit report that you didn’t like and, just because you wanted to see what happens, you hit the ‘Dispute’ button? Well, the world is changing and that small button can have a BIG impact on an applicant for a mortgage. Disputed accounts on a credit report can signify a few things. One may be a reduction of a negative credit item’s weight on a FICO score or it could mean that a borrower is trying to mask a real problem by portraying it as a mistake. Either way, Fannie Mae and HUD don’t like credit disputes.
In the past few months, it has been communicated that any credit report with a dispute listed must have the dispute removed and the borrower re-scored to make sure that their FICO score is an accurate reflection of their situation.
Here are some of the challenges:
a. A borrower willing to remove the dispute(s)
b. A creditor that is willing to remove the dispute and report it to the credit agencies and
c. That creditor must be provide proof of the dispute being removed
According to a top loan originator with Innovative Mortgage Concepts, Jason Klaskin, this process can take 30 days or more per account. “Imagine if you have a borrower approved for a loan today, they put in an offer and then everything is put on hold for 30+ days because credit was pulled just prior to closing and a newly disputed account pops up on their credit report.”
What can you do?
Again, working with a lender that knows about these changes and their potential impact – and proactively manages their applications and approvals- can save you headaches with your transactions. It is also important for you to hold off on any disputes until after the loan process is complete. If you can get approved with your current credit situation then there is no need to dispute anything while the loan is in process.
