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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.

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.

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.

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:

  • Zulma Y Carlos • May 14, 2016

    Gracias Sr. Gallardo por realizarnos nuestro sueno de tener nuestra propia casa, por asignarnos un buen realtor, apreciamos todo el tiempo que ud dedico para obtener el mejor de los creditos y el mejor interes para nosotros, pocas personas encontramos como ud. totalmente dedicado y enfocado a darnos el tiempo necesario en cualquier momento y hora, son una mortgage totalmente seria, nosotros lo recomendamos 100% Dios le bendiga siempre.

  • David Villarreal • February 28, 2022

    I would like to thank the entire team of Clear Lending for making possible my loan after so many attempts. I read the google reviews and I was pretty impressed and so I decided to give a shot. I am so glad I trusted them the loan approval and my home search. This is a crazy market but with patience I was able to accomplish what I have been waiting for so long. I am a veteran and my scores are not the best. Nonetheless Joan, Patti and Jorge made this possible. Thanks again guys I will always be in debt to you all.

  • Amy Valentine • June 10, 2021

    First let me start off by saying no, I did not get my loan approved (yet). No-fault but my own. However, I highly recommend this company. They are knowledgeable, professional, and courteous to whatever your situation is. They stay in contact with you and clearly explain every step of the process so you never feel like you are in the dark. I would even say they go out of their way to make sure you completely understand everything and are comfortable with all the information being provided to you. Joan and Jorge, you were wonderful and after I get a few hiccups worked out, I will be back to try again. :)

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