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Credit reports with accounts in dispute.

 

How do disputed accounts on credit report affect to the chances to qualify for a home mortgage?

Consider this; a credit score not only measures creditworthiness but provides great insight to banks and lenders about the history and thus the ability and intend to payback debts. Scores are calculated by the major credit-rating agencies--Experian, TransUnion and Equifax--based on a number of factors on a credit report, including the number of open accounts, the types of accounts revolving vs installment, available vs used credit and/or the length of credit history.

Your payment history on credit will greatly influence the terms under which you can borrow money to purchase a home. Derogatory credit in the form of disputed accounts may lower your chances to qualify or even be the reason for eliminating your chances to purchase a house.

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If an applicant's credit report has $1,000+ in disputed derogatory credit accounts, the loan application must be downgraded and manually underwritten meaning your debt to income qualifying ratios will be lower and thus potentially affecting your approval. 

Disputed Charged off accounts, disputed collection accounts and/or disputed accounts with late payments in the last 24 months are examples of disputed derogatory credit. Then disputed medical accounts, disputed derogatory credit resulting from identity theft, credit card theft or unauthorized use are excluded from the $1,000+ cumulative balance. To exclude these balances, the Mortgagee must provide a copy of the police report or other documentation from the creditor to verify the status of the accounts.

If none of the reasons above apply then you will be required to remove them from your credit. Banks are aware accounts in dispute do not reflect the negative impact of late payments being disputed on its scores and thus artificially help you obtain higher scores than should be otherwise. This is why underwriters require during the approval process to remove certain accounts in dispute and rescore your credit to obtain the correct real scores.

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Disputed Derogatory Credit Accounts of a non-borrowing spouse in a community property state are not included in the $1,000+ cumulative balance for determining if the mortgage application is downgraded.

Also disputed accounts with zero balance, disputed accounts with late payments aged 24 months or greater and disputed accounts that are current and paid as agreed are considered non-derogatory disputed accounts and thus not included in the $1,000+ cumulative balance for determining if the mortgage application is downgraded. 

This is why it is so important an experienced loan officer analyzes your credit in detail before accounts in dispute are removed as doing so has a high probability to lower your scores beyond minimum required.

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Don't wait any longer and find out how much you can get Pre-Approved for.

Whether you are considering purchasing or refinancing an existing mortgage loan, Clear Lending can help you. Simply complete our secure and encrypted Pre-Approval Form online and we will contact you right away to review best options for you.

This advertisement is not an offer for an extension of credit. Programs available only to qualified borrowers. Programs subject to change without notice. Underwriting terms and conditions apply. Some restrictions may apply.

 

Customers Reviews:

  • Mary Jones • July 27, 2018

    Thanks Joan, Patricia and Samantha for your amazing help making the purchase of my dream house possible. I really recommend Clear Lending and its team. I remember searching for local lenders who would lend borrowers with low credit scores and I found them. I read some reviews and realized some had been in my same situation. I applied and after 67 days I closed the purchase of the cutest house! They even helped me negotiate with sellers to get them pay all closing costs. Joan I am so thankful I will refer you everyone that is in need to buy a house. I will never forget what you and your team have done for me and my family. Thanks, thanks and thanks again!!!!   

  • Sharon Franco • January 21, 2016

    July 28th.... A very important day for someone at age 44. A huge change that was much needed but none the less, very difficult. After living in my previous home for 15 years and being with someone for 25 years, I found myself back at my Mom’s house and starting over. After wallowing in my sadness for a while, I decided to start looking for a new home for my young adult children, dogs and myself. Thankfully, a cousin had given me a number to a realtor that led me to Joan with Clear Lending. With all the difficult changes I also was in for a fight when it came to applying for a mortgage. Being naive to the process, Joan was very patient and helpful. Even when I felt hopeless, he reminded me constantly it would be okay and it was part of the process, I'm not sure but I think maybe a part of him was starting to see the difficulty I was facing. But one night, I received the best phone call in the world!! I was clear to move forward and close on my home. I thank God every day for putting the right people in my path to help in my new chapter of life. Thank you Joan and Clear Lending for working so hard on my approval for my mortgage.

     

    God Bless

  • Atasha Alfred • October 03, 2017

    Joan is simply amazing! He truely cares about his clients and works day in and day out to ensure they are satisfied. We used a VA loan and despite the credit hiccups we have had in the past he was able to assist us and give us a better rate than was offered by other lenders. Joan showed us that mortgage lenders are people too and he really understood our circumstances and our need to be able to close soon after contacting him. He is simply the best and we would recommend him to anyone else using a VA home loan or any other type of home loan.

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