Issues With Credit Disputes During Mortgage Process

Credit Disputes During Mortgage Process

Gustan Cho Associates

Credit disputes during mortgage process can halt the mortgage loan application and mortgage approval process. The three credit reporting agencies ( Transunion, Experian, Equifax ) often times report inaccurate information on consumer’s credit reports and the only way of correcting it through disputing the inaccurate information either to the credit bureaus and/or creditor through credit disputes.  Also, many consumers who want to repair their credit either by themselves or a credit repair company need to do it by disputing the negative credit items to the credit reporting agencies stating that the derogatory credit information that is being posted on the consumer’s credit report is inaccurate.  When you first write a credit dispute letter to each of the credit bureaus reporting it, the credit bureaus will post that the account is in dispute on your credit report while they are investigating the credit dispute.  The credit reporting agency will then contact the creditor and notify them of the credit dispute and the creditor has 30 days to respond to the credit bureaus as to the validity of the credit dispute by the consumer.  If the creditor does not respond to the credit dispute to the credit bureaus, the credit reporting agency needs to remove the inaccurate information by federal law.  However, many times the credit reporting agencies still do not remove the negative disputed credit item and the consumer’s credit report still will state that the credit item in question is still under credit dispute.  You cannot have certain credit disputes during mortgage process or your mortgage loan process will come to a sudden halt and the mortgage process cannot continue until the credit disputes have been retracted and removed from your credit report.  This can cause delays in the mortgage process and getting a mortgage loan approval and closing on your home loan.

Credit Disputes On Medical Collections

One great advantage with medical collections is that the mortgage industry is more lenient with credit disputes during mortgage process with medical collections.  Mortgage lenders categorizes collection accounts into two separate categories.  Medical collections and Non-Medical Collections.  Credit Disputes during mortgage process on medical collection accounts is exempt and consumers can dispute negative medical collection items and that will not affect credit disputes during mortgage process.  You can have unpaid medical collection balances and it will not affect you during the mortgage loan application and mortgage loan underwriting process.  There may be mortgage lenders that will not accept credit disputes during mortgage process with medical collections, but if you do run into a mortgage lender that will tell you to retract medical collection account credit disputes during mortgage process, then get a different mortgage lender because medical collection accounts credit disputes are exempt.

Credit Disputes During Mortgage Process On Non-Medical Collection Accounts

There are certain mortgage lending guidelines with regards to credit disputes during mortgage process on non-medical collection accounts.  If you have unpaid collection accounts with zero balances, you can have credit disputes during mortgage process.  If you have unpaid non-medical collection accounts of greater than $1,000 ( total of all unpaid collection accounts from all of your creditors ), you need to have all of your credit disputes retracted in order for your mortgage process to go further.

Credit Disputes During Mortgage Process On Charge Off Accounts

You can have charge off accounts on your credit report and qualify for a mortgage loan without having to pay it off.  Charge off accounts are ignored by mortgage lenders.  However, you cannot have credit disputes during mortgage process on charge off accounts or your mortgage process will come to a halt until the credit disputes on charge off accounts are retracted.  Do not dispute charge off accounts if you intend in applying for a home loan.

Major Issues With Retracting Credit Disputes During Mortgage Process

Retracting credit disputes during mortgage process can have major negative impact on the mortgage loan borrower.  If you retract a credit dispute, the chances are that your credit scores will go down.  If you are barely meeting the minimum credit score requirements to qualify for a home loan and you need to retract credit disputes during mortgage process,  the drop of your credit scores may make you ineligible to qualify for a home loan.  There are many instances where a mortgage loan borrower qualified for a home loan with their credit scores but they did not qualify for a home loan after the credit disputes were retracted.  There are instances where the consumer’s credit scores can drop more than 50 FICO points by having the credit disputes retracted.

Related> Credit Disputes Can Cause Loan Denial

Related> 2015 Mortgage Guidelines On Credit Disputes

Related> Credit Disputes During Mortgage Process

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

Comments are closed.