Credit Report Dispute

By Gustan Cho

Foreclosure FAQs - Mortgage Loans in Florida and IllinoisFolks who go through the credit repair process often do a credit report dispute with the credit bureaus stating that they are disputing the derogatory information on their credit report.  Under the federal Fair Credit Reporting Act, when a consumer does a credit report dispute to the credit bureaus, the credit bureaus has 30 days to investigate the consumer’s dispute and notify the creditor to validate the derogatory information.  If the creditor does not respond back in 30 days to the credit bureaus, the credit bureaus needs to remove the credit report dispute in question.  This is a technique used often by many credit repair companies and consumers who do credit repair by themselves.  Home buyers who plan on applying for a mortgage loan need to pay special attention to the new mortgage lending regulations Fannie Mae has implemented when it comes to credit report dispute.

What Types Of Items Can Be Disputed?

Many consumers dispute all derogatory items from their credit reports hoping the creditor does not respond back and the credit bureaus need to remove the negative derogatory credit item.  Often times this works and if the creditor responds back, the they dispute it again for the second go around and third go around.  Does credit repair work?  Absolutely.  I have seen charge offs, collection accounts, bankruptcies, foreclosures, late payments, tax liens, and judgments be removed from credit reports.  There are many savvy creative credit repair consultants who know the ins and outs of loopholes and can get derogatory items completely removed from credit reports.  However, if you are planning on purchasing a home or refinancing in the near short term, there are strict policies on credit report dispute mandated by Fannie Mae if you are not aware of this new rule and guidelines concerning credit report disputes, your mortgage process will come to an abrupt halt.

Fannie Mae Guidelines On Credit Report Dispute

If you are applying for a mortgage loan and have a credit report dispute and the derogatory item has a credit balance of $1,000 or greater, your mortgage application cannot proceed until the disputed item is retracted or the balance is paid off in full.  If you are disputing a derogatory credit item that has zero balance, you are alright and it is exempt under the credit report dispute policy of Fannie Mae.  You can also dispute a charge off since charge offs have zero balance.  Medical collections are treated differently.  You can have an outstanding unsatisfied balance on any medical collection accounts and have a credit report dispute and this is exempt form the credit report rule of Fannie Mae.

Retracting Credit Report Dispute Can Be Disasterous

A credit report dispute can easily be retracted by the consumer by notifying the credit bureaus or creditor that you are retracting the dispute and to leave the derogatory credit item alone.  Simple?  Not really.  Retracting a credit report dispute will lower your credit scores.  Depending on the consumer, a retraction of a credit report dispute can drop a consumer’s credit scores by 80 points or more.  I have seen this happen over and over again.  Also, there are times where a creditor will not retract the dispute and leave the dispute on your credit report.  This can take weeks if not months.

Related> How credit report dispute can stop you from buying a house

Related> Can I close on a loan while my credit report is in dispute?

Related> What happens to your credit score when you dispute?

Related> Removing consumer dispute statements

Related> About the credit report dispute 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.

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