Credit Disputes During Home Loan Process

This BLOG On Credit Disputes During Home Loan Process Was UPDATED On July 3, 2017

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 has less than $1,000 in outstanding non-medical collections, those are exempt.
  • Charge offs cannot be disputed.
  • Loan Officers should not issue pre-approval letters if borrowers have credit disputes during home loan process until all disputes has been retracted.

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 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 the mortgage lender sees that you have credit disputes in process, your 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.

Mortgage Borrowers who need to qualify for home loans, please contact us at 1-800-900-8569 or email us at gcho@gustancho.com.  We are available 7 days a week, evenings, weekends, and holidays.

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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.

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