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Credit reports with accounts in dispute.

 

How do disputed accounts on credit report affect to the chances to qualify for a home mortgage?

Consider this; a credit score not only measures creditworthiness but provides great insight to banks and lenders about the history and thus the ability and intend to payback debts. Scores are calculated by the major credit-rating agencies--Experian, TransUnion and Equifax--based on a number of factors on a credit report, including the number of open accounts, the types of accounts revolving vs installment, available vs used credit and/or the length of credit history.

Your payment history on credit will greatly influence the terms under which you can borrow money to purchase a home. Derogatory credit in the form of disputed accounts may lower your chances to qualify or even be the reason for eliminating your chances to purchase a house.

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If an applicant's credit report has $1,000+ in disputed derogatory credit accounts, the loan application must be downgraded and manually underwritten meaning your debt to income qualifying ratios will be lower and thus potentially affecting your approval. 

Disputed Charged off accounts, disputed collection accounts and/or disputed accounts with late payments in the last 24 months are examples of disputed derogatory credit. Then disputed medical accounts, disputed derogatory credit resulting from identity theft, credit card theft or unauthorized use are excluded from the $1,000+ cumulative balance. To exclude these balances, the Mortgagee must provide a copy of the police report or other documentation from the creditor to verify the status of the accounts.

If none of the reasons above apply then you will be required to remove them from your credit. Banks are aware accounts in dispute do not reflect the negative impact of late payments being disputed on its scores and thus artificially help you obtain higher scores than should be otherwise. This is why underwriters require during the approval process to remove certain accounts in dispute and rescore your credit to obtain the correct real scores.

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Disputed Derogatory Credit Accounts of a non-borrowing spouse in a community property state are not included in the $1,000+ cumulative balance for determining if the mortgage application is downgraded.

Also disputed accounts with zero balance, disputed accounts with late payments aged 24 months or greater and disputed accounts that are current and paid as agreed are considered non-derogatory disputed accounts and thus not included in the $1,000+ cumulative balance for determining if the mortgage application is downgraded. 

This is why it is so important an experienced loan officer analyzes your credit in detail before accounts in dispute are removed as doing so has a high probability to lower your scores beyond minimum required.

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Don't wait any longer and find out how much you can get Pre-Approved for.

Whether you are considering purchasing or refinancing an existing mortgage loan, Clear Lending can help you. Simply complete our secure and encrypted Pre-Approval Form online and we will contact you right away to review best options for you.

This advertisement is not an offer for an extension of credit. Programs available only to qualified borrowers. Programs subject to change without notice. Underwriting terms and conditions apply. Some restrictions may apply.

 

Customers Reviews:

  • Beverly Evans • January 28, 2014

    Hi Joan,
    Words cannot express how appreciative I was for all your help in getting me my dream home. I was very impressed with your professionalism and your sincere concern in doing whatever possible to help me get into my home. Since I was retired and on a lesser income it was a challenge for you to get my loan approved. You never gave up and you convinced me not to give up either. Because of you I am in my new home and extremely happy and appreciative for you. I will recommend you to anyone needing to buy a home.
    Thank you very much, and God Bless you Beverly


  • Aura Figueroa • October 08, 2017

    We are very happy with the service provided by Joan, Patricia and Elena. They were patient with us and explained all the process step by step. I highly recommend Clear Lending, they answered all our questions, and never rushed us to do anything. Great service!

  • Carolyn De Leon • December 22, 2016

    Good afternoon Joan, thank you so much for all your hard work and patience during this journey. I know it was not easy but we made it. I hope God continues to use you to help make other people's dreams come true. You and your team have been a blessing to my family. Have a Merry Christmas and a most wonderful and prosperous New Year!!!!! Once again, Thank you and Best Regards Carolyn De Leon

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