How To Correct Errors In Your Credit Report To Qualify For Mortgage

How To Correct Errors In Your Credit Report To Qualify For Mortgage

This BLOG On How To Correct Errors In Your Credit Report To Qualify For Mortgage Was UPDATED On July 12, 2017

Consumers who filed bankruptcy , all debts that are part of the bankruptcy should be reflected on credit reports.

  • If there were 10 creditors as part of the Chapter 7 bankruptcy, all of the ten creditors should be noted that the creditors were part of bankruptcy on credit reports. 
  • However, there are many cases that credit reporting agencies do not report the discharged debts as part of bankruptcy and the errors in your credit report will affect the mortgage process. 
  • A bankruptcy will drop credit scores by at least 100 points or more. 
  • This massive drop in credit scores is just a temporary drop and credit scores will increase as the Chapter 7 Bankruptcy ages. 
  • By not including a creditor as part of the bankruptcy discharge, it reflects that consumers are still owing that debt which can affect the mortgage process.

Correcting Errors In Your Credit Report

If the debt that was included as part of  Chapter 7 bankruptcy petition has been discharged but the credit reporting agencies are not reporting as such, it reflects that the debt is after the Chapter 7 Bankruptcy. Many lenders automatically disqualify borrowers with late payments after bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale. If the debt does not have the verbiage that it is part of bankruptcy, lenders will see it that the borrower are currently late on that particular debt which means late payments after bankruptcy.

  • It is hard enough in trying to repair credit and improve credit scores and this erroneous reporting makes it much more difficult.
  • Never dispute derogatory and/or errors in credit report without consulting with loan officers.
  • Credit Disputes are not allowed during mortgage process.

Credit Reporting Agencies

The three credit reporting agencies are the following:

Credit Bureaus record discharged debts that were part of the consumer bankruptcy’s discharge and reporting it as current bad debt, thus hurting the consumer from getting mortgage loans and other forms of credit.  Having these discharged bankruptcy debts being recorded as active debts can disqualify borrowers for mortgage loan.

FTC Reveals 25% Of Consumers Have Errors In Your Credit Report

Recent studies conducted by the Federal Trade Commission revealed that 25% of consumer’s have errors on their credit report.

  • At least 10% of the consumers with errors on their credit report were errors that were serious enough to cause a dramatic impact on the consumer’s ability to secure credit or loans.
  • Everyone should check their credit report on a regular basis to monitor their credit and to check for any errors. 
  • Everyone is entitled by law for an annual free credit report by each of the three credit reporting agencies; Transunion, Equifax, and Experian.

Related> What Do Underwriters Look In Credit Reports?

Related> Minimum Credit Scores For Mortgage Programs

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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