Curing Loan-A-Phobia Blog

If there are inaccuracies on your credit report, request the accounts to be updated, don't dispute the account. These are two very different functions. A "dispute" is you saying you don't think the entry is yours and it needs to be verified.

Many so called "credit repair experts" have made big business out of disputing valid credit records to "clean" up someone's credit. I can tell you countless stories of my client's coming back to me after trying one of these companies, even after I told them NOT to, and then crying to me because it made their scores worse.

If there is something on your credit report that absolutely is not yours, then yes - you should dispute it. But if it is a case of an account that IS yours being misreported (balance, payment history, credit limit incorrect, etc.) then you need to submit the appropriate documentation to the credit bureau that is misreporting the item and request the account be updated.

Here's why. The Fannie Mae and Freddie Mac automated underwriting systems are trying to battle fraudulent disputes. The only way they've come up with to do this is to deny any loans where the borrowers have disputed any tradelines on the credit report until someone can verify the account. Sounds like a simple fix, right? We'll just call the creditor and verify the account. ...  No way man. Let me tell you a little story.

About 4 months ago a previous client came to me to refinance his house. This borrower had excellent credit scores and excellent income to debt ratios. This should have been a slam dunk file. However, last year his HR department had offered a FREE credit monitoring service (not mentioning any names EXPERIAN). He did have one account that was being misreported twice so he used the online system to dispute the incorrect tradeline entry. While he was in the system, he viewed several other accounts/tradelines just to check on them. What he didn't realize is that every time he clicked on a tradeline, the system threw it into the list of disputed items.

Now, a full year later, his loan gets stuck in underwriting because 5 of his accounts are showing up as disputed. The underwriter says we have to get the dispute comments removed and rerun. Sounds simple right? Wrong!

After 2 months of trying to convince first the creditors to remove the comments because he never really disputed the accounts (the representatives couldn't seem to understand that there were no disputes to settle because there were no fricken disputes to begin with!), then the bureaus, then our underwriters, ... basically he had to dispute the dispute... crazy. Finally, two months later I was able to convince my underwriter to manually override the system.

If this had been a purchase instead of a refinance, the borrower would have lost the house.

After years of searching, I've finally found a company that I feel comfortable referring my credit challenged clients to. Some things are relative simple to fix - I can help you with those at no charge. And some items take more strategic in-depth work. That's where I can refer you to someone you can trust.

If you or someone you care about has questions about this topic, please email me or call me.

Denese

Click here to see what the "new and improved Good Faith Estimate" looks like. Should make for some enjoyable reading. :-)

As of January 1, 2010, all loan applicants will be receiving this version of the Good Faith Estimate. This also means that any loans we have in process will have to use the new form too.

Be prepared for this to cause a backlog in your files.