Credit Report Disputes Can Doom Home Loan Chances

 

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Lenders are looking at credit report disputes in a different light now and now credit report disputes can doom home loan chances .  It used to be when obtaining a California home loan and the borrower had a dispute with the creditor for whatever reason, lenders would turn their heads the other way.  Lenders didn’t feel the dispute would end in the creditor suing the borrower and attaching /garnishing their wages which would put the repayment of the mortgage loan in jeopardy.

Those days are gone.  Borrowers should pull their own credit report thru a free service such as annualcreditreport.com to see what their credit looks like prior to applying for a California home loan.  It’s important for the borrower to see what’s there before a lender pulls their credit report.  There are erroneous items that may show up unbeknownst to the borrower and these items may be pulling down the credit score.  Clearing one of these such items could take months.  Lenders are putting the onus on the borrower now to fix these types of issues more than ever before instead of rolling the dice and granting a loan.

 A disputed item on a credit report will read as a “dispute” on the credit report. For the mortgage process to keep moving forward the disputed item needs to be resolved and either gets deleted altogether or shows as a paid collection account. But…beware when an account that’s been disputed for a few months or years gets changed to read as a paid collection account, the credit score may drop!  That’s why it’s best to get these items fixed well in advance of applying for a California home loan.  Lenders who have borrowers with disputed accounts who are applying for a mortgage will require that a new credit report be pulled during the loan processing period and prior to funding their loan to reflect that the dispute comment on the report is gone and the account is resolved to the point that the lender feels safe that this particular creditor can not sue the borrower at any future time.  After the lender pulls your credit report again, the credit score must still be high enough to obtain the loan as well.

Some lenders for one reason or another in the past as well as presently do not put much weight on medical collection accounts.  These lenders even today won’t hold medical collection accounts against the borrower even though they show on the credit report.  But in the near future they may not be the case.

It’s a good idea to take advantage of the annualcreditreport.com free credit and pull your credit report before you apply for a loan and at least once per year to see if anything is there that doesn’t belong. Credit report disputes can doom home loan chances.  Crossing your fingers and hoping the lender credit report comes back “clean” isn’t a good idea.  Identity theft, fraud and misreported information is very common in today’ s environment.  So whether you’re applying as a California first time homebuyer or if you’re buying a car, check your credit and get your disputed accounts taken care of, it could make a huge difference in obtaining favorable credit terms or getting a loan at all!

Best,

Kevin Walton

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