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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:

  • Ricardo Cruz • October 23, 2015

    I would like to thank Joan for everything he did for us. He is the best in the business and is very knowledgeable. He made the home buying process very enjoyable and he was available at any time to answer any questions we had. He was easy to contact and easy to talk to. I will be referring everyone I know to Joan. Thank you.

  • Josue Rodriguez • September 26, 2018

    Great service!!!! this people really understand your needs and help you all the way until you close your house, they will tell you the true all the time and answer all your question, is the 3 house i buy and this have been with no doubs the best expirience i ever had, Ademas hablan espanol!!! (they speak spanish). so if you need a home loan DO NOT HESITATE IN CONTACT THIS PEOPLE, THEY ARE THE BEST!!!!!!!!!!!!!!!!!!!!!!!

  • Rosa Iraheta • March 28, 2018

    Joan has help many of my clients to get their loans, he is very professionals and helpful, and always available for any questions that me or my clients had during the loan process. One of my client was in DACA program and Joan help him to get his loan. I will recommend Joan and his team . Thanks you

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