This BLOG On Credit Disputes During Home Loan Process Lending Guidelines Was UPDATED On April 11th, 2019
Credit Disputes During Home Loan Process is not allowed.
- There are certain exemptions when it comes to credit disputes during home loan process
- Medical Collections are exempt from credit disputes during home mortgage process
- Zero balances are exempt on non-medical collections
- If borrowers have less than $1,000 in outstanding non-medical collections, those are exempt
- Charge offs cannot be disputed
- Credit disputes on collections and/or derogatory credit that is 24 months or older are exempt from retraction
- Loan Officers should not issue pre-approval letters if borrowers have credit disputes during home loan process until all disputes have been retracted
If a loan officer thinks that by retracting credit disputes it will lower your credit scores, the loan officer many instruct not to remove the disputes. VA and FHA Loans allows for manual underwriting. If credit disputes will be lowering credit scores, leave the disputes alone and the loan officer can downgrade it to manual underwriting.
Credit Repair To Delete Negative Items
There are thousands of credit repair companies that claim they can get delete derogatory credit tradelines off credit report. Most credit repair companies use the credit dispute method.
Here is how it works:
- Every consumer can repair their credit
- Consumers can mail or do a credit dispute online on derogatory credit items to the credit bureaus
- Consumers will be claiming that the item does not belong to them or that it is inaccurate
- Credit Bureaus will contact the creditor and request validity on the disputed item
- If creditor does not respond within 30 days, the credit bureaus need to remove the item that is being disputed
- If creditor responds with proof, the disputed item remains on credit report
How to Dispute Bad Credit That is False Information
Once you contest a negative credit item, the credit reporting agency needs to verify your credit dispute by contacting the subject creditor and get proof that your credit dispute is valid all within 30 days.
- If the creditor does not get back to the credit reporting agency, the credit reporting agency needs to delete it from credit report
- Many consumers dispute their derogatory credit information by consistently writing a credit dispute letter to the three credit reporting agencies
- If the creditor does verify that the late payment or derogatory information is valid, consumers can re-dispute negative item
- Each time the creditor has 30 days to respond to dispute
- If the creditor does not verify credit dispute, the credit reporting agency has to delete negative information from consumer credit report
Every consumer should pay attention to their credit reports and check for errors. Good credit means lower mortgage interest rates.
Bad Credit Home Loans: Will My Credit Report Stop Me?
When you think of buying a new home, you cannot have any credit disputes in progress.
- If lender sees credit disputes in process, the mortgage loan will be halted until the credit dispute is removed
- In the event that you have a credit dispute currently going on but need a new mortgage loan, you need to pull the credit dispute effective immediately
Credit Dispute Can Halt Mortgage Process
Retracting credit disputes during home loan process takes time.
- There are many times where consumers request that the credit dispute be retracted but creditors and/or collections agencies and credit bureaus will not retract it
- This causes major delays in the home buying process
- A pre-approval letter issued with credit disputes is invalid
- Again, retracting credit disputes will drop credit scores and many times, borrowers will not qualify for FHA Loans or other loan programs once disputes have been removed to lower credit scores
- Please refrain from disputing credit until closing on mortgage loan
- Loan officers can explain and help borrowers who have credit disputes
Borrowers who have inaccurate information on their credit report, loan officers can do rapid rescores where the credit bureaus can update credit within 3 to 5 days.
Borrowers who need to qualify for home loans, please contact us at 1-262-716-8151 or text us for faster response. Or email us at firstname.lastname@example.org. We are available 7 days a week, evenings, weekends, and holidays.