The Truth About Dispute Statements/Notations On Credit

In the past few years financing rules have become more rigid when it comes to consumer dispute notations on credit. What is a consumer dispute notation?  When a consumer disputes information on credit a dispute note will be placed on the account in question. Initially, when a negative account is disputed it may very well be taken out of the score formula or at least cause increases in credit scores until verification by the creditor and the credit bureau is complete. 

This also applies to good accounts that have been disputed. If the account is a positive trade line the pending dispute could have the opposite impact and reduce scores. When the initial verification is complete the account will either be corrected or verified as accurate. At that point the dispute notation will be removed and the account will then be fully factored into the score. If the consumer continues to dispute the account after the initial verification a notation is placed stating the consumer disagrees and disputes the information on the credit report. This can also alter the score.  

Most loans will not be approved by a lender or will be kicked into manual underwriting if a consumer dispute notation is pending or unresolved on credit. Lenders are very aware of how these statements can change scores and most have rigid restrictions about what they will accept when approving financing. Most mortgage professionals are aware that a consumer dispute notation can inhibit their ability to get a loan closed but don't really know why.

Lenders want to price loans correctly with the level of risk the borrower reflects. An accurate score prior to pricing and extending financing is their primary concern which is why removing and/or resolving consumer dispute notations on accounts prior to getting a loan is so important. 

A high quality credit repair company will explain this to loan officers when they have completed changes to an individuals credit and will remove any dispute notations before giving the applicant approval to begin the mortgage process. Unfortunately, there are many dispute factory type credit repair companies out there and even consumers that randomly dispute information with no strategy or foresight into how these dispute notations will impact the loan application. Mortgage professionals need to make sure the lender will approve financing if they plan on submitting an application with these open statements on credit.  If a loan officer pulls a credit profile and sees consumer dispute notations they should make the applicant aware of the need to have these notations removed or resolved.  In many cases it is quite difficult and confusing for the layman to address these issues on credit. Feel free to reach out to us for assistance.

Call us  at 877-292-0656 with any questions or feedback on credit challenged clients or credit in general!

Making sure credit is analyzed with future real estate purchases in mind is a MUST before taking an action that can foil those plans and limit a consumers options for a better quality of life. 

"Guiding you from financial distress to financial success"

2014 Brings Higher Rates And A Need For The Best Credit Scores

As 2014 unfolds we are seeing higher rates and pricing on financing. We are also seeing a resurgence of subprime lending. So although it seems most loan applicants will be approved for financing, many may be paying much more due to higher rates and points. If an applicant's scores are under a FICO score of 740 pricing could be substantially higher. When costs increase something has to give, and this may very likely be a reduction in the loan amount.  Since it is a sellers' market these days and inventory is down buyers must arrange to get the best pricing and interest rates to afford the loan amount needed for purchasing a property.  Sellers want to know that they are dealing with a viable buyer before taking their home off the market.  Preparing credit, income, and debt ratios well in advance could make the difference for purchasing a bigger/higher priced home and living in a more desired area with a preferred school district. 

Realtors, bankers, CPAs, and financial planners should educate their potential and current clients about these changes and how to put their best foot forward when getting ready for a real estate purchase.   Buyers must lay the ground work well in advance by building the best credit scores and correcting any errors, delinquencies, or balance discrepancies reported that are interfering with their credit score goals.  Understanding the rules and having the right professional take control of the credit repair/education process equals happier buyers and more closings. 

With the CFPB cracking down on credit bureaus, creditors, and banks, many dispute-factory type credit repair companies are finding less and less success for their clients. These credit repair companies are churning out factory-type letters to dispute credit, and in turn the bureaus have become much more sophisticated and smarter to combat it.  Since we use a sophisticated and unique individual credit repair strategy for every credit profile and account our success ratio continues to be excellent unlike the other credit repair companies.   

Besides changes in rates and pricing, many bankers are experiencing road blocks to loan approval when the bank finds open "consumer dispute statements" listed on credit accounts.  Banks do not like "consumer dispute statements" on credit since it means the account in question is taken out of the FICO formula, leaving the bank with a false score and therefore no real sense of the loan's risk. This is why banks want these statements removed or resolved before loan approval is compete. There are a few reasons why these dispute statements remain on credit.  First, if an unsophisticated credit repair company was hired to dispute information on credit with the bureaus they usually have limited success and whatever accounts remain on credit may still reflect an open dispute status. These companies don't always take the time to remove the open dispute statements. Another common reason is that some consumers try to fix their own credit and due to limited knowledge are usually unsuccessful and the consumer dispute statement is never removed.

Feel free to reach out to us at 877-292=0656 if you have any credit questions or reports you would like reviewed!  

"Guiding you from financial distress to financial success...so Make Precision Your Decision"