Should You Dispute

Trade Lines?

One of the biggest mistakes you could make would be disputing your late payments. Recently, Underwriting guidelines have changed.  You can no longer have a disputed account on your credit report and get approved for a mortgage.  It must be removed, in order to get approved.   

 

When you have a disputed account it is taken out of the scoring model, causing the underwriter to not get a fair and complete picture of your credit situation.  You must get this disputed account removed before the file goes into underwriting.  

 

The process of removing a disputed account can take 30-60 days.

Here is my suggested process to remove a disputed account:

First contact the creditor and make sure that they in fact have it in their system as disputed.  If they do not, then have them mail/fax a letter stating “this account #123 is not in a disputed status”  If it is disputed verbally ask that they “undispute” the account and mail you a letter.  If they refuse revert to the following instructions.

 

  • Write a letter to the credit agency asking them to remove the language stating the disputed account.  Please understand that the process of investigating the account can take 30 days in itself.

  • At the same time that you are doing #1, you will also want to write a letter to the creditor(that you are disputing) stating “that this account is no longer in dispute” and to remove it.

  • The next step is to WAIT!  You do not want to hound the creditor or agency, or send more then one request.  When you send another request it can start the process all over.

  • Pull a new credit report 35-40+ days after you do #1 and #2.  At this time hopefully it shows the account is no longer in dispute.

 

Fannie Mae, Freddie Mac and HUD(FHA) have all adopted this new guideline.  It is possible to get an exception if there is just one account in dispute or on a FHA loan (if there is more then one).  Keep in mind that if this disputed account is not caught until a file is in underwriting, it could cause your closing to be delayed or worse case you not getting approved.

 

Under the Fair Credit Reporting Act, consumers are guaranteed the right to dispute erroneous information on any account in their credit files. Once a consumer challenges that information, a notation to this effect must be made on the file. As long as it remains, credit-scoring systems due to new FACTA laws will not factor the disputed account into the computation of the consumer’s score.

 

 

 

Understanding How Your FICO Score Affects Your Mortgage

The single most important step in applying for a home loan is pulling the credit report. The credit report provides the lender with critical infomation used to make the a lending decision.

 

When a lender gets the credit report and reviews the credit score, it immediately sets into motion a filtering process that determines several things:

 

  • Can you get a loan at all?

  • Does the credit need to be repaired?

  • What type of loan is best for you?

  • What down payment will be required?

  • What pricing adjustments will there be?

 

Can you get a loan at all?

 

Current (as of July 2014) almost all loan mortgage programs require at least a 620 credit score to do a loan at all. Although technically FHA has no minimum score, only a few lenders will allow a score below 620 on a case by case basis and only when their are unusual circumstances such as the death of wage earner, or other catastrophic circumstance.

 

 

Below is a great pamplet to scroll through provided by MyFICO.com that covers all aspects of what makes up your credit score. To read the full size booklet just click here

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Independence Title Company is locally owned and operated in Central Texas, with some of the most knowledgeable and successful title professionals in the state. We’re the largest independent title agent in Texas,* licensed directly in well over 20 counties, and are supported by every major underwriter in the U.S.

MortgageRateSurveys.com is a group of retired mortgage professionals with over 100 years combined  experience. Rates at a Glance was designed to provide accurate rates and information to the consumer on the ever changing mortgage process. If you feel a lender is being less than honest, please email us at Abuse@mortgageratesurveys.com

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