I’m sure if we asked each of you, right now, to name one thing that you think can make you ineligible for a mortgage, you could each name at least two.
One of those is a credit dispute.
What exactly is a credit dispute? When you have found a discrepancy or inaccuracy on your credit report and have reported it so it can be resolved, that is a credit dispute. Essentially, you are disputing the credit score that has been provided to you by a credit bureau. And, of course, law requires credit bureaus to release accurate credit scores.
But that won’t happen to me, right? Actually, discrepancies in credit scores is much more common than people think. There was a study done in 2012 by the Federal Trade Administration that recorded one in every five Americans have some error on their credit report.
That doesn’t necessarily mean your identity has been stolen or someone has taken a credit card out in your name. It can be a simple as an incorrect address or point of contact. Regardless of how big or how small, once you have reported it, it has become a “dispute.”
And a dispute automatically means an inflation of your credit score.
It’s all about accuracy
Unfortunately, even though your score has been temporarily inflated while the dispute is being resolved, it may prevent you from getting approved for a loan. And that’s simply because lenders want an accurate representation of your credit report; the one you are giving them is subject to change.
There are just a few things to keep in mind, moving forward with your mortgage. Credit disputes are not resolved overnight. They can take months to handle. And depending on your situation, you may not actually have that kind of time.
If you are in the middle of purchasing a home or refinancing on your home, it is best to speak with a mortgage expert first. The higher interest rate, the additional costs from delaying the closing may not be worth the wait. Especially if it is a very simple dispute, such as one over an address.
We have said this before, but it is definitely true: everyone’s situation is a unique situation. In order to determine the best next steps, talk to one of our mortgage experts- they can evaluate the situation and may shed some light on the situation that would not have occurred to you otherwise.